UBS shares shaken by Arnold’s departure

Luqman Arnold's stay at the top of UBS has been short. UBS

UBS shares traded lower on Wednesday, following news that the president of the executive board, Luqman Arnold, was leaving after just seven months in the job.

Arnold is to be replaced by 44-year-old Swiss banker, Peter Wuffli, chief executive officer of UBS Asset Management.

UBS’s stock closed down more than two per cent on Wednesday at SFr80.90, following a 4.2 per cent drop on Tuesday, when Luqman’s departure was announced.

During a telephone conference, Wuffli brushed off the market reaction by saying “the market does not like surprises and this was a surprise”.

British-born Arnold took over as head of Switzerland’s biggest bank just seven months ago, becoming the first non-Swiss to hold the position.

Differences of opinion

His immediate departure reflects a number of differences of opinion, according to the bank.

“We regret the necessity to make this leadership change,” said Marcel Ospel, chairman of the board of directors. “But we didn’t want to take any risks and we wanted the group’s peace of mind.”

For his part Wuffli remained tight-lipped about the reasons behind Luqman’s departure.

“It was a number of differences of opinion,” he said. “We cannot point to a single factor or source, but what we can confirm is that they did not have anything to do with financial operational or control issues.”

The board voted unanimously on Sunday to replace Luqman, but the decision won’t herald a change in style. “Under the new leadership, there will be no change in UBS’s strategy, focus, direction or values,” said Ospel.

Wuffli also added that the stability of UBS’s management team was of paramount importance and that it would not be compromised as a result of Luqman’s departure.

“We all regret the circumstances,” he said. “We all recognise Luqman’s very strong contribution to the strategy positioning as well as the financial transparency of the firm but I can assure you that we do have a very stable management team.”

Surprise decision

The banking group’s decision has come as a surprise to banking analysts, particularly as UBS has not been forthcoming about the reasons behind the change.

“Ospel says that Arnold has done everything one would expect of a good CEO,” Markus Gisler, head of Moneycab, a financial website, told swissinfo. “Arnold’s departure could be due to a number of strategic issues on which they disagree.”

The Briton’s nomination to the top job at Switzerland’s top banking institution had raised a few eyebrows, but nationality was apparently never an issue.

“They must have had other arguments to get rid of Arnold, because he was really appreciated,” Gisler told swissinfo. “When you choose someone for the CEO’s job, you can’t suddenly decide you don’t like him shortly afterwards

UBS Asset Management

As Wuffli moves into Arnold’s shoes, John Fraser will take over as chief executive officer of UBS Asset Management.

“I think Arnold’s departure is a loss for UBS, but Peter Wuffli has been involved in banking strategy for a number of years,” said Gisler. “He has one disadvantage though, because he does not have a very good reputation for public communication, and Arnold has done an excellent job communicating.”

Other changes are afoot at UBS. John Costas will become CEO of UBS Warburg, working in tandem with current chief executive Markus Granziol.

Warburg’s Private Clients business unit, centred on UBS PaineWebber, will also become independent within UBS group. The move comes just one year after PaineWebber’s merger with Warburg.

swissinfo with agencies