Shareholders at Switzerland's biggest bank, UBS, will decide on Wednesday if its chief legal expert is a suitable replacement for Marcel Ospel as chairman of the troubled group.This content was published on April 22, 2008 - 21:35
Peter Kurer was nominated for the position vacated by Ospel after the bank suffered $37 billion (SFr37.6 billion) in subprime losses. But stinging opposition to Kurer has been highly publicised.
The next UBS chairman would be expected to steer the bank's turnaround following a disastrous 12 months. The nomination of Kurer surprised many observers because, as general counsel at UBS, he is not only an insider but has limited banking experience.
Some shareholders, including former UBS chief executive Luqman Arnold and Swiss sustainable investment foundation, Ethos, picked up these points. Arnold issued a statement through his investment fund Olivant, protesting that Kurer was a member of the tainted executive board.
"On this basis, we do not believe that he can bring the objectivity required to the role, nor that he represents a break from the insular corporate governance tradition of UBS," it said.
"We also note that Mr Kurer has no banking, strategic, credit or market risk experience – all skills that are of critical importance given the situation in which UBS finds itself."
Arnold met senior UBS executives this month when increasing Olivant's stake in the bank to 1.1 per cent of the shareholding.
Kurer hit back at such "discriminatory" criticisms in an interview with the Financial Times newspaper, saying he should be judged on "actions and not concepts". He also denied that he would be a stop-gap appointment to allow time to find a permanent successor to Ospel.
Kurer demonstrated his resolve by announcing plans to reform the chairman's office and to introduce new board members with specialist banking knowledge.
The 58-year-old lawyer joined UBS in 2001 from Zurich law firm Homburger where he had advised on big deals such as the 1996 merger of Ciba-Geigy and Sandoz to form pharmaceutical giant Novartis. He joined the bank's executive board in 2002.
Eugen Haltiner, chairman of the Swiss Federal Banking Commission, praised Kurer earlier this month as "an extraordinarily qualified individual" who "does not beat around the bush". Haltiner added that Kurer's nomination "was consistent with our expectations".
But Kurer was painted in a less than flattering light in the 2006 film "Grounding", chronicling the fall of Switzerland's former airline carrier Swissair. The movie portrayed his defection as a Swissair lawyer to UBS just before the bank allegedly reneged on a promise of funding.
However, UBS shareholders are expected to approve his appointment as chairman on Wednesday to lead what Kurer described as a three-year fight to restore the bank's reputation.
Several other candidates for the post were suggested by the media, including Deutsche Bank chief executive Josef Ackermann and even former Justice Minister Christoph Blocher.
But as no other candidate has been nominated, the alternative to voting in Kurer would be no chairman at all.
Shareholders are also expected to vote in favour of UBS's proposal to raise SFr15 billion of capital via a rights issue.
swissinfo, Matthew Allen in Zurich
UBS general counsel Peter Kurer graduated in law from Zurich University and was admitted as attorney-at-law in Zurich. He also holds a law degree from the University of Chicago. He was born on June 28, 1949 and is a Swiss citizen.
He started his legal career as a law clerk at the District Court of Zurich.
He joined the Zurich branch of consultancy firm Baker&McKenzie in 1980, first as associate, and later as partner, staying there until 1990.
Between 1991 and 2001 he was a partner at the Homburger law firm in Zurich.
He joined UBS in 2001 as general counsel and was elected to the executive board a year later where he became a close ally of former chairman Marcel Ospel.
UBS endured a tough 2007, starting with the collapse of its hedge fund Dillon Read Capital management. Two months after that, in July, chief executive Peter Wuffli abruptly departed without clear explanation.
In October of last year, UBS said it would cut 1,500 jobs in its investment banking arm, including that of its head Huw Jenkins. UBS chief financial officer, Clive Standish, left at the same time.
Later that month the bank announced it was writing off SFr4.2 billion on subprime losses and SFr726 million pre-tax loss for the third quarter – the first quarterly loss in nine years.
In December UBS said another $10 billion would be written off as the US subprime crisis deepened. It also announced plans for a SFr13 billion funding plan from Singapore and Middle East investors, which was passed by shareholders in February.
A further $4 billion was written off in January, bringing the total losses to around SFr20 billion. Another SFr19 billion was written off in April, accompanied by the news of Marcel Ospel's resignation as chairman.
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