Appointing a digital, retail banking expert as new CEO leaves the Swiss bank reliant on passed-over contenders
By Rochelle Toplensky
Ralph Hamers will leave ING to take over as UBS’s chief executive in late autumn.
Photo: walter bieri/Shutterstock .
UBS, the world’s largest wealth manager, has appointed a new chief executive who has no wealth management experience.
Late Wednesday night, the Swiss bank unexpectedly announcedRalph Hamerswould leave his post at ING—a Dutch retail and wholesale bank—to take over as chief executive in late autumn.
After a 15-month search, UBS Chairman Axel Weber concluded that Mr. Hamers was the man for the job. The Dutchman has run a large, systemically important bank and has strong digital skills.
Mr. Weber and Mr. Hamers worked for years together at the European Banking Group and the Institute of International Finance.
The UBS chairman assured investors that Mr. Hamers will earn his “UBS passport” during the handover and “this is not about changing strategy, this is about changing CEOs.”
But the new boss’s inexperience in wealth management is a glaring gap. Mr. Hamers has successfully reshaped ING, a bank with a $42 billion market capitalization. He delivered shareholders a total return of nearly 43% over his more than six year tenure as CEO—impressive when compared with the break-even return for the average European bank.
However, managing the money of the world’s millionaires and billionaires is central to UBS’s business and growth. Its $2.6 trillion of invested assets contributed over half the bank’s revenue and nearly two thirds of its profit last year.
The Dutch banker’s lack of expertise is concerning mostly because the co-heads of the wealth management business—Tom Naratil and Iqbal Khan—were two of the four internal contenders for the top job. Both men are “world leading,” according to Mr. Weber, so it isn’t certain they will stick around for long.
Mr. Hamers does have a range of relevant skills. He has captained ING through a recent money laundering scandal—a depressingly valuable experience for running any big bank these days.
His digital savvy can help slim down and optimize back and middle office functions. Front-line services are a bit less obvious—whiz bang apps are nice, but billionaires do expect high-touch personalized services from their Swiss bankers.
And UBS has already been investing in digitization—Chief Operating Officer Sabine Keller-Busse, another internal contender for the job, has been overseeing its multibillion-dollar annual investment in technology.
Mr. Hamers’s appointment will likely contribute some immediate cost savings—current UBS chief Sergio Ermotti was Europe’s highest paid bank CEO in 2018, earning more than five times the salary of his replacement was at ING, according to Citigroup. And UBS’s 78.9% cost-to-income ratio indicates that Mr. Hamers can apply his frugal ways more widely to cut costs and boost returns.
It is a tough job though. The outlook for European banks is harsh—persistent negative interest rates, anemic growth at home, continuing global trade tensions and economic uncertainty from the coronavirus. UBS is well placed in China, but that relatively high-growth market is being targeted by many rivals.
Shares in both banks jumped Thursday on the news, though ended the day nearly flat. ING’s initial bounce most likely reflected shareholder relief—the Dutch bank pulled a bond issue earlier in the week and investors had feared the explanation was new money laundering problems rather than the CEO’s departure.
Mr. Webers’s plans are important for UBS, but given his skills, so too are the plans of the unsuccessful internal candidates for the CEO post, particularly Mr. Khan and Mr. Naratil.
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