At UBS, Succession Looms Large as Bank Ponders Post-Ermotti Era

Ermotti and Weber have overseen a push to pivot the bank away from investment banking since the global financial crisis to focus on managing money for the rich. The firm merged its two wealth-management businesses last year under co-heads Martin Blessing and Tom Naratil, making that unit the centerpiece of a plan to boost growth. Those plans haven't helped reverse a share decline in the past year as growth across Europe has slowed.

UBS's stock fell 29 percent in the past year, slightly worse than the broader banking market. It's outperforming rivals such as Credit Suisse Group AG, which declined 33 percent, and Deutsche Bank, which lost about half its market value last year. Still, the shares have fared worse than counterparts in the U.K.

UBS began intensifying its succession planning after the departures of top dealmaker Andrea Orcel and former wealth head Juerg Zeltner. In the latest twist, Orcel's exit to lead Banco Santander SA ended with the Spanish bank rescinding its offer following a dispute over his pay. UBS held a hard line, withholding bonuses he was owed from previous years amounting to tens of millions of dollars. That would have left Santander to make it up to the executive, which it decided not to do. Orcel doesn't plan to return to the Swiss bank, a person with knowledge of the situation said.

"In the last year you've lost Andrea Orcel, you've lost Juerg Zeltner. That has led to a few questions about succession," Jonathan Fearon, a fund manager at Standard Life Aberdeen, said by phone. "If you're bringing external people in now to an executive role, with a view to being involved in CEO succession-planning in future, you might look at slightly younger candidates."

As executives left, UBS started considering external candidates who could eventually lead the bank, Bloomberg reported in December. A few weeks later, people familiar with the matter said that the Swiss bank had held preliminary talks with Bank of America Corp.'s ex-investment banking head Christian Meissner about joining as a potential successor.

While UBS didn't comment on the plans, Weber confirmed in a Bloomberg TV interview that the bank was in early-stage succession discussions and considerations as to who would eventually take over. That interview took some inside the bank by surprise — according to people familiar with the matter — as his comments marked a shift from repeated previous statements that the two men would simply continue working together until 2022.

"The CEO and I are in our eighth year at the bank," Weber said in the TV interview. "That's a point in time where you need to start thinking about what is it you're going to do and how you're going to pass the bank over to your successors — I'm deliberately talking plural — and in what sequence you do that. We're at the very early stage of those discussions."

For his part, Ermotti has been holding discussions with potential candidates, people familiar with the matter said. Asked about CEO succession at the bank's investor day in October, he said it was a question for the board, adding "as long as I have the energy and the passion for what I do and people believe that it's okay, then I will do it."