UBS AG, the European bank with the biggest losses from the US subprime mortgage crisis, will reorganize its investment bank into a "slimmed-down version" to complement wealth management.
"Significant and relevant questions have been asked about the value of the 'one bank' integrated model," Peter Kurer, nominated to replace Marcel Ospel as chairman of Switzerland's largest bank, said in a prepared speech before yesterday's annual general meeting in Basel.
Kurer said he plans to chair a committee, which would include board members Ernesto Bertarelli, Sergio Marchionne and Peter Voser, to evaluate the scope of UBS's future activities and risk appetite. The bank is facing calls from shareholders, including former President Luqman Arnold, to separate its investment bank from the wealth management business after about US$38 billion in subprime-related writedowns over the past three quarters, said Bloomberg News.
Chief Executive Officer Marcel Rohner, who replaced Peter Wuffli in July, said UBS will "no longer aim to offer everything to everyone in investment banking." The securities unit will have to generate capital for future growth by itself while "surpluses from the wealth management business will be returned to shareholders through dividends or share buybacks," Rohner said.
Arnold and other investors including Harris Associates LP's David Herro have urged the bank to seek an outside candidate for the chairman role instead of Kurer, who they say lacks the experience needed to lead the bank.