UBS’s CEO Peter Wuffli resigned, in large measure due to losses related to the closure of an internal hedge fund last May. The Wall Street Journal, in “UBS Ousts CEO Wuffli After a Spate of Setbacks,” reports:
Swiss financial giant UBS AG — buffeted by a series of setbacks, including the costly blowup of an internal hedge fund — is removing Chief Executive Officer Peter Wuffli.
Marcel Rohner, the 42-year-old deputy chief executive and head of its private-banking and wealth-management operations, will succeed Mr. Wuffli, 49, effective today. UBS Chairman Marcel Ospel, 57, will continue his term in that job for an additional three years. The bank said Mr. Wuffli will leave the firm after the UBS board of directors, in a rebuke, rejected Mr. Ospel’s recommendation that the executive succeed him as chairman.
UBS, long dominated by its private-banking operations, built an impressive investment-banking business in the past few years, but that business faltered in recent months. The company has seen the departures of some big-name rainmakers, including veteran deal maker Ken Moelis, and another co-head of investment banking, Jeffrey McDermott, who last week said he was leaving to join Stony Lane Partners, a new private-equity firm.
In addition, UBS had to shutter Dillon Read Capital Management, an in-house hedge fund that made some bad bets in the mortgage market. The bank expects to book as much as $300 million in costs to shut the business.
Ironically, Bloomberg tells us that Wuffli made his mark by reducing risk in the wake of an earlier hedge fund debacle:
Wuffli, an ex-reporter at Zurich’s Neue Zuercher Zeitung and former McKinsey & Co. consultant, was aware of the risks of investing in hedge funds. Three months after Swiss Bank Corp. combined with UBS in 1998, Chairman Mathis Cabiallavetta resigned over the losses from Long-Term Capital. CEO Ospel, who came from Swiss Bank, told shareholders the company would focus on traditional services such as investment banking and asset management.
To help restore confidence in UBS, Ospel turned to Chief Financial Officer Wuffli, whose father had resigned as president of Credit Suisse’s executive board in 1977 amid losses at the bank’s branch in Chiasso, Switzerland.
In the following years Wuffli oversaw a reduction of risk- taking. He was promoted to president 2001 and became CEO in 2003, after Ospel became chairman. He oversaw a recruitment drive at the investment bank, integrated UBS’s purchase of Paine Webber Group Inc. in 2000, and posted profit gains in 2003, 2004 and 2005. The stock rose 86 percent in that three-year period.