UBS's chairman Peter Kurer has decided not to stand for re-election after only one year in the job, saying essentially that he feels he has accomplished what he set out to do in terms of putting the Swiss bank in a position to ride out the challenges resulting from the global financial crisis.
If the board's nomination is accepted, he will be succeeded by Kaspar Villiger, a former Swiss finance minister, who during his time in public office was involved in such crucial decisions as the enactment of legislation against money laundering and the initiation of a supervisory body for financial markets. He also helped finalise the EU directive on the taxation of savings income, which was aimed at strengthening the Swiss financial markets - all of which are now key ingredients with regard to the competitiveness of Switzerland.
"Kaspar Villiger has had a distinguished career in public service, where his leadership capabilities and integrity have earned him high respect. In addition, he brings substantial experience as a businessman and as a member of boards of multinational corporations," says Gabrielle Kaufmann-Kholer, chairman of the governance and nominating committee of the UBS board of the directors.
The fact that UBS is turning to such a well-regarded Swiss financial personality to lead the bank shows that the board acknowledges that one of the key issues at the moment is to rebuild investor confidence. The worst may not be over in terms of asset write-downs and the need for further recapitalisation, but among the most important things for UBS right now is to reverse, on a sustainable basis, last year's outflow of client money - especially from its private bank and asset management divisions - which was prompted by investors seeking a safer haven for their savings amid concerns about UBS's balance sheet strength.
Indeed, in yesterday's press release, Kaufmann-Kholer notes that the board believes that Villiger's presence and contribution "will send a clear signal and will prove valuable at a time when the bank is working to renew its commitment to all stakeholders to seek to maintain high standards of credibility, reliability and sustainable performance".
Villiger says he recognises the difficulties that still lie ahead and adds that he has accepted to chair the board out of a sense of service to Switzerland and its people. "We need to respond to the current challenges by relying on our core values of integrity, hard work and reliability. I believe I can contribute to the re-establishment of these values."
Kurer, who was previously UBS's group general counsel - a position he had held since joining the firm in 2001 - spent his year at the helm of the Swiss bank focusing on more basic issues such as a reduction of risk concentration on the balance sheet; the implementation of improved risk-control systems; the establishment of proper governance to reflect the rapid changes in the financial markets; and the introduction of responsible and long-term, value-oriented incentive plans. He has also re-examined the bank's entire strategy, which led to the announcement in January of a restructuring that is intended to "refocus UBS on its Swiss core business, its international wealth management franchise in Switzerland and on the growth potential of its onshore business globally". The investment bank will focus on three businesses going forward: the investment banking department and equities activities, with their very strong global franchises; and the client-facing fixed-income areas, including foreign exchange.
Said UBS's vice chairman, Sergio Marchionne: "Peter Kurer deserves a lot of credit and recognition for having helped UBS back on track. He accepted this engagement out of a sense of duty and service to the institution and has worked tirelessly to accomplish all the objectives he had set for himself and for the bank at the beginning of his tenure."
Earlier this year, Kurer was also instrumental in getting Oswald Grubel to accept a job as CEO of UBS after Marcel Rohner told the board in January that he intended to leave the bank. Grubel has spent almost 40 years with Credit Suisse in various management positions both at a group level and in the investment banking and private banking divisions. From 2003 until his retirement in the spring of 2007, he was co-CEO and CEO and has been credited as the architect behind a successful turnaround of the bank and for restoring confidence in the lender during turbulent times. He started his new job at UBS last week.
Despite Kurer's hard work, numerous challenges remain for Grubel and Villiger to tackle, including an ongoing investigation in the US where UBS is being asked to hand over the names of thousands of US citizens who used offshore accounts with the bank to evade US taxes. The bank last month formally accepted responsibility for helping Americans hide assets from the US government and agreed to pay $780 million in fines and restitution. It also revealed the names of about 300 US clients, but has refused to provide any further information beyond that. The case has hit at the heart of Switzerland's image as a haven for bank secrecy.
UBS also posted a net loss of SFr19.7 billion ($16.8 billion) for 2008, up from the 2007 loss of SFr5.2 billion, with the fourth-quarter shortfall alone coming to SFr8.1 billion. The pre-tax loss in the investment banking division doubled to SFr33.7 billion, despite a reduction in personnel expenses to SFr4.9 billion from SFr11.3 billion. This performance needs to be turned around.
Villiger served as a member of the Swiss federal council for 15 years until 2003. Before his eight years as minister of finance between 1995 and 2003, he was minister of the department of defence. He was also the president of the Swiss Confederation between 1995 and 2002.
Since his retirement from politics, he has served on the board of directors at Swiss Re, Nestle, and the Zurich-based newspaper, Neue Zurcher Zeitung, and is also a member of the global leadership foundation, which promotes good governance around the world. If elected, Villiger will resign all his corporate responsibilities in order to devote his energy to UBS.
Shareholders will vote on Villiger's nomination at the AGM on April 15.
