ZURICH — UBS AG, one of the banks hardest hit by the global credit crisis, said Wednesday that embattled Chairman Peter Kurer would step down in favor of a former member of Switzerland's governing Cabinet at the Swiss bank's April 15 shareholder meeting.
The announcement that retired Swiss politician Kaspar Villiger would replace Kurer marks the second major change atop the Swiss bank in less than a week. Thursday, in a surprise move, UBS said that former Credit Suisse Group Chief Executive Oswald Gruebel would replace Marcel Rohner as CEO of UBS with immediate effect.
Kurer said he was leaving after the bank's completion of changes to its operations, such as slashing risk-taking and putting more emphasis on its core private banking arm, which caters to wealthy individuals. The moves were made in reaction to some $50 billion in write-downs related to the credit crisis.
"I now think it is time to complete this transition and leave the office at the end of my one-year term," Kurer said in a statement.
The entrance of Swiss-born Villiger, 68, a member of the country's seven-person governing Cabinet from 1989 to 2003, during most of which time he served as finance minister, is linked to the hiring of Gruebel as CEO. Villiger initially turned down an offer late last year to chair UBS, but revisited his decision after Gruebel's appointment.
Villiger is ideally suited to smoothing ruffled feathers in Switzerland's political establishment, senior Celent analyst Nicolas Michellod said.
In an unusually strongly worded statement, the Finance Ministry, which spearheaded a shore-up of UBS in October, welcomed Villiger's appointment, saying he and Gruebel make an ideal team to reorient UBS.
Villiger, who doesn't have broad banking and business experience some investors had hoped for, is likely to cede more ground on determining UBS strategy to Gruebel as the two attempt to return UBS to profitability after a streak of quarterly losses.
"I think Oswald Gruebel will increasingly have more freedom, and will be able to assert his influence not only operationally but also strategically," Sal. Oppenheim analyst Javier Lodeiro said. He rates UBS at buy with a CHF22 target.
Analysts said the political and diplomatic skills of Villiger will dovetail with those of Gruebel, known as a terse communicator and quick decision-maker, and who is expected to slash jobs and restructure more vigorously than his predecessor, Rohner. Villiger acknowledged the influence of Gruebel, whom Villiger said encouraged him to take the chairman's post, saying the two will meet weekly and share an "intense, interactive" cooperation.
Shares in UBS, down 31% this year compared with a 32% fall in the Stoxx Europe 600 bank index, rose on the news. At 1419 GMT, they were up CHF0.36, or 3.6%, to CHF10.25.
Villiger, who cited "a sense of service" to Switzerland and its people as his reason for accepting the job and proposed 850,000 Swiss francs ($720,339) as an annual salary, will quit board seats at insurer Swiss Reinsurance Co. and Nestle SA if elected.
"I believe these to be exceptional times for UBS and Switzerland, and I recognize the difficulties that still lie ahead," Villiger said.
The appointment of Kurer, formerly UBS' chief general counsel, one year ago was almost immediately met with skepticism by shareholders and the Swiss public, mainly because of lack of banking experience but also because of what detractors said was his close association with long-standing former UBS chairman Marcel Ospel.
Kurer was also dogged by a U.S. probe into allegations of tax evasion against the company, which UBS settled recently through a deferred prosecution and $780 million fine.
When the bank admitted it had made mistakes, some experts questioned Kurer's claim that he knew nothing of the wrongdoing, since as chief lawyer at the time he was UBS' point person for all potential legal problems. Wednesday, UBS reiterated that neither Kurer nor former CEO Rohner knew of fraudulent UBS offshore schemes to aid clients avoid taxes.
Kurer, who is 59, said he will leave UBS altogether at the end of April, after two-week handover to Villiger following the shareholder meeting.