UBS chairman wants a 'bloodless coup' like Morgan Stanley's when it's time for Swiss bank's new CEO

By Louis Goss

UBS Chairman Colm Kelleher has said he hopes the process of appointing a new CEO to succeed current chief Sergio Ermotti will be a "bloodless coup," in a similar manner to the process that saw Ted Pick named as Morgan Stanley's new chief last month.

Speaking at the Financial Times Global Banking Summit in London on Tuesday, Kelleher said he aims to draw up a shortlist of three potential candidates with a view to ensuring a peaceful transition from Ermotti, who was taken on as CEO in April following the UBS (UBS) (CH:UBSG) acquisition of Credit Suisse.

"Morgan Stanley was a bloodless coup -- I would love to get to the stage in future where UBS could run the same playbook," Kelleher, who was elected as UBS's chair in April following his retirement from a 25-year career at Morgan Stanley (MS) in 2019.

Kelleher said he would like to see a repeat of the smooth process that saw Ted Pick named as the replacement for Morgan Stanley's current CEO James Gorman in October. The UBS chief, however, refused to offer any clues as to who might be shortlisted as the Swiss bank's new head.

Ermotti was brought back to UBS in March to lead the Swiss bank's takeover of Credit Suisse after having previously left the firm in October 2020 to head reinsurer Swiss Re.

The CEO, who previously guided the Swiss lender through the 2008 financial crisis, is expected to lead UBS's efforts to integrate Credit Suisse into its business before exiting the job in 2026.

Kelleher also said UBS will be a "totally revalued stock" on completion of efforts to integrate Credit Suisse into its business, after the Swiss bank saved its rival from bankruptcy by acquiring the company for 3 billion francs ($3.4 billion) in June.

He argued UBS is at an advantage due to its unrivaled position in the global wealth management market, which has a greater potential to scale as compared to Morgan Stanley's U.S. focused position.

"What makes Morgan Stanley different from UBS, is that Morgan Stanley is a U.S. wealth manager," Kelleher said. "We're the second-largest wealth manager in the U.S. but we're the largest global wealth manager"

Kelleher said UBS is now adamant that any "bad apples" will be rooted out of Credit Suisse as he argued that governance failures are responsible for the Zurich bank's troubles that saw it face a multitude of legal issues in the years following the 2008 financial crash.

"We certainly have to ensure that the UBS culture is embedded," Keheller said. "Credit Suisse would not be in the position that it is in if it had been allowed to run properly."

More broadly, Kelleher warned of growing risks that could lead to a crisis of confidence in the markets, including an asset bubble in private credit. "There is no doubt that there's an asset bubble going on in private credit," Kelleher said. "You are seeing leverage building up."

-Louis Goss

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11-28-23 0923ET

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