UBS Dumps I-Bank Chief as Part of Shake-Up

ZURICH (Reuters) – UBS AG (UBSN.VX)(UBS.N) ditched the head of its troubled investment bank on Monday, part of a top-level shake-up by CEO Oswald Gruebel aimed at stemming persistent losses.

Switzerland’s largest bank by assets said it had appointed Alex Wilmot-Sitwell, a veteran UBS banker, and Carsten Kengeter, who recently joined from Goldman Sachs (GS.N), as co-heads of the business, replacing Jerker Johansson after just a year in the job.

The appointments come two months after former Credit Suisse (CSGN.VX) head Gruebel took over at UBS and set his sights on swingeing job cuts and a ruthless restructuring to return the world’s biggest wealth manager to profitability.

“The appointment is consistent with Gruebel’s strategy since he came to UBS. He is leaving no stone unturned to try and recover, and we see progressive change at management level,” said Elie Darwish, an analyst with Exane BNP Paribas.

Risky investments brought UBS to its knees in the subprime crisis, and analysts say former Morgan Stanley-star Johansson was not quick enough to detox UBS’s balance sheet and turn the investment bank into the client-oriented business complementary to the wealth management division that Gruebel is aiming for.

Insider Wilmot-Sitwell has built up a wealth of contacts among the world’s business elite during a career in M&A and corporate finance, analysts say, while Kengeter has the expertise to turn around UBS’s fixed-income business, which is still saddled with illiquid assets.

FAST CHANGES

Earlier this month Gruebel brought in Ulrich Koerner, another former top Credit Suisse executive, as his Chief Operating Officer to lead a cost-cutting drive. 

The new CEO then announced he would slash 8,700 jobs and said that UBS, which reported the biggest annual loss ever by a Swiss bank last year, would post a further 2 billion Swiss franc net loss in the first quarter. 

Gruebel also sealed the sale of Brazilian unit Pactual for $2.5 billion ahead of the bank’s full quarterly earnings release on May 5.

UBS’s first-quarter profit warning contrasted sharply with the net profit of 2 billion francs reported by rival Credit Suisse over the same period. 

A banking source said Gruebel was still assessing which businesses to keep and which managers to replace.

Shares in UBS were down 0.5 percent at 1045 GMT, outperforming a 1.7 percent fall in the DJ Stoxx index of European banks .SX7P.

Analysts said that news at the weekend that the Swiss government was seeking a deal with Washington to end a tax fraud probe against UBS was also helping the stock.

Wilmot-Sitwell, 48, joined UBS in 1996. He has been joint global head of the investment bank since November 2005 and chairman of UBS Group Europe, Middle East and Africa since January 2008.

He played a key role in Lloyds TSB’s (LLOY.L) takeover of mortgage lender HBOS, in which UBS was financial advisor.

Kengeter, 42, joined last year from Goldman Sachs and is joint global head of fixed income, currencies and commodities, areas where UBS cut jobs as they were hit hard by the crisis.

UBS is seeking a return to profitability and a brand makeover after making writedowns of more than $50 billion.

Monday’s investment banking changes followed a year in which Johansson, who was appointed by previous UBS CEO Marcel Rohner, oversaw an exit from municipal bonds, structured debt and proprietary trading, as well as most commodities businesses.

“The continued changes surely do not help to bring stability to the investment bank, but may be part of Gruebel’s plan to further renew the key positions within the bank,” said Mathias Bueeler, an analyst with Kepler Capital Markets.

By Martin de Sa’Pinto and Lisa Jucca
(Editing by John Stonestreet/Will Waterman)