Banks
New President: UBS is breaking an unwritten law
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The major Swiss bank UBS has a new president, the investment banker Colm Kelleher. This means that both top positions in the group will be filled with foreigners for years to come. Which is why the personnel decision is still correct.
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At the two big banks, UBS and Credit Suisse, at least one of the two top positions – i.e. Chairman of the Board of Directors and Head of Group Management – should remain in Swiss hands. Credit Suisse adhered to this unwritten law when it filled its two top positions. UBS has now arranged his successor differently in the long term. The German Axel Weber is succeeded as President by the Irish Colm Kelleher. The Swiss Sergio Ermotti is succeeded by the Dutchman Ralph Hamers as CEO. This means that the two top positions will be occupied by two foreigners for years to come.
Above all, there was an idea behind the unwritten law: In the heavily regulated banking business, it is crucial to have good relationships with national politics, regulators and industry. The financial crisis seemed to have confirmed this idea. Worse things could be averted at the time because the interaction between the national players worked well when UBS had to be rescued by the Swiss state in 2008. So has UBS already forgotten these lessons from the financial crisis?
No, she didn’t. But she doesn’t hold it up quite as high as it was otherwise last done. And rightly so.
This can be seen in the fact that the well-connected Swiss banker Lukas Gähwiler has been appointed Vice President. It is doubtful whether a Swiss Vice President would be sufficient in the event of a crisis. In order to guarantee the interaction with national actors, the president on the side of UBS would have to play the central role in the end. But at least UBS tries to have both on the board of directors: someone who knows Switzerland with Gähwiler and someone who knows the USA with Kelleher.
This gives her an advantage that should not be underestimated: With Kelleher, she has a profound knowledge of the US financial center, which is still the most important financial center in the world, at the helm. Until his resignation in 2019, the 64-year-old Kelleher was President of the investment bank Morgan Stanley, responsible for Institutional Securities Business and Wealth Management. If the next global financial crisis should break out in the USA again, UBS would hopefully not be ripped off the same way as it was in 2008. At that time, it increased its dependence on supposedly safe financial securities, as many of the large and better networked American investment banks increased their risks long since dismantled.
And finally, the unwritten law can confidently question. Credit Suisse has adhered to it. And yet – and perhaps because of it – was recently involved in almost every financial scandal in a leading role. And it should not be forgotten that during the financial crisis, UBS also darted into the abyss with a dual Swiss leadership. Whereby this top did not even realize at the time the great risks that pile up. It was believed to be Swiss, to be careful and controlled. In that sense, one might wonder how the unwritten law ever achieved this status in the first place.
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