Incoming UBS head wants to maintain integrated business model
14 April 2008
BERN – The incoming chairman of UBS AG, Peter Kurer, said the Swiss bank would stick to its integrated business model, despite massive write-downs caused by the subprime crisis, according to a newspaper interview published Saturday.
Kurer, who is general counsel and will succeed Marcel Ospel as chairman, rejected a proposal to separate its private client operations from the stumbling investment unit. He made the comments in an interview with Swiss daily Neue Zuercher Zeitung.
“We are sticking to our integrated model, which interlocks the three businesses wealth management, asset management and investment banking,” Kurer was quoted as saying.
A vote to elect him as the new UBS chairman will be held at the 23 April shareholders annual meeting in Basel.
“Our wealth management business is so large today because we are also doing investment banking,” he was quoted as telling the Zurich-based newspaper. Kurer added that many wealthy clients buy services from the investment banking unit.
Last week, former chief executive officer Luqman Arnold pushed UBS to separate its investment banking unit from the rest of the business, a proposal supported by some shareholders and analysts.
UBS, Switzerland’s largest bank, has reported write-downs of CHF 37.5 billion for the past nine months – so far the largest reported by any bank with exposure to U.S. defaults on risky mortgages.
Power-broker Ospel announced earlier this month he would not run for another term after the bank reported further severe losses because of the subprime mortgage crisis.
Officials have stuck to the bank’s integrated model, which can offset losses in one unit with profits in others.
In the interview, Kurer did not directly comment on Luqman’s criticism that he lacked the qualifications to take the helm of the banking giant and that UBS should seek an outsider with experience as chairman, CEO or chief financial officer.
“I know this bank in all its detail, and I think this was decisive,” Kurer was quoted as saying about his nomination. He has been working in the UBS top management for seven years.
He said rebuilding clients’ confidence in the bank was the most pressing issue at the moment.
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.
Kurer said restoring the bank’s excellent reputation would take around two to three years.
[AP / Expatica]