The former chief executive of the stricken banking giant calls nomination of the new chairman a hasty process.

8 April 2008

ZURICH - A former chief executive of UBS AG called Monday for an outsider to take the helm of the stricken Swiss banking giant.

Luqman Arnold, the head of investment firm Olivant Ltd., criticised the ''hasty and flawed process'' that led to the nomination of general counsel Peter Kurer to succeed Marcel Ospel as chairman at the 23 April shareholders annual meeting in Basel.

Ospel said last week he would not run for another term after the bank reported further severe losses due to the subprime mortgage crisis, taking its total writedown over the past nine months to CHF 37.7 billion (US$37.4 billion).

Arnold, in a letter to UBS Vice Chairman Sergio Marchionne posted on Olivant's Web site, said Kurer's long-standing role on the bank's executive board made him ''an insider in the fullest sense''.

''We neither believe he has the qualifications ... nor that he is the best possible candidate that UBS can attract,'' Arnold said.

Instead, UBS should seek someone with experience as chairman, CEO or chief financial officer of a large listed company and ideally be Swiss ''to facilitate dealing with what is a national crisis as much as a company specific crisis.''

The troubles at UBS have shaken Switzerland's confidence in its powerful banking industry, forcing senior government officials to reassure thousands of small investors and customers that their money is safe.

Jean-Pierre Roth, president of the Swiss National Bank, the country's central bank, told Sion-based daily Le Nouvelliste on Monday that there was no risk of bankruptcy at UBS.

Arnold also said in his letter to Marchionne that his group was not insisting that UBS sell off its investment banking arm. In a similar note last week he suggested that the bank sever its investment unit to save its private client operations and also criticised the move to appoint Kurer.

Olivant, which is registered in the tax-haven of Guernsey, holds more than 0.7 percent of UBS shares.

UBS stocks on Monday continued their steady climb since Ospel announced his plans to step down, rising 8 percent to CHF 36.12 (USD 35.62) on the Zurich exchange.

[AP / Expatica]