UBS Puts Digital First With New Tech-Savvy CEO -- Update
February 20 2020 - 10:47AM
Dow Jones News
By Margot Patrick
UBS Group AG spent the last nine years reinventing itself as the
world's largest wealth manager. For its next act, the bank wants
technology to drive higher profits from its client base and reduce
costs.
On Wednesday, it tapped a digital banking specialist, Ralph
Hamers, to be its next chief executive from Nov. 1, surprising
investors and analysts who expected either an internal candidate or
an outsider with experience running a wealth management business.
Mr. Hamers will join from ING Groep NV, where he has been CEO since
2013 in a 29-year career mainly focused around retail and corporate
clients at the Dutch lender.
Mr. Hamers got the job after building a reputation at ING for
successfully moving more customers out of branches and onto their
phones and computers. Under his leadership, the bank also increased
revenue as it improved internal systems and the technology behind
how it interacted with clients.
The moves let it cut costs by shutting hundreds of branches and
shedding thousands of jobs in Belgium and the Netherlands.
UBS Chairman Axel Weber said Mr. Hamers beat out other
candidates to succeed Sergio Ermotti in a 15-month CEO search
because of his record in transforming ING. Like UBS, ING underwent
a lengthy post-2008-crisis restructuring to narrow its operations
and return to financial health.
"The hope that we have is that he will help us get to the next
level in digitalizing our business," Mr. Weber said Thursday.
Already, UBS spends around $3.5 billion a year on technology. The
bank's strategic plans won't change, according to the chairman. The
Swiss firm lowered its financial targets in January to reflect
weakness in the world economy and the effects of low and negative
interest rates.
Mr. Hamers said he hit it off with Mr. Weber through their work
together at an industry association, the Institute of International
Finance, where Mr. Weber is chairman and Mr. Hamers is a board
member. A uniting feature at ING and UBS is that they both had to
take bold actions to weather the challenges facing banks, he said.
Both are also on a list of systemically important banks compiled by
global and national regulators, reflecting their size and
complexity.
Mr. Hamers declined to say whether he would look to cut bank
branches in Switzerland, where UBS has a large retail network. He
plans to dig in deep to understand UBS's business model once he
starts a transition period at the bank from September, before
taking the CEO role.
For the Dutch executive, going to UBS should mean a big pay
rise. Mr. Ermotti is among Europe's best-paid bank CEOs, making
around $15 million a year through salary and bonuses. He started as
UBS CEO in 2011 and helped boost its share price by shrinking its
investment bank and centering its activities around wealth
management.
In contrast, Mr. Hamers was denied a raise in 2018 from a
EUR1.75 million ($1.9 million) base, and had to forgo a bonus
because of a money-laundering scandal. ING paid EUR775 million that
year to settle a criminal investigation over failures in its anti
money laundering systems. On Thursday, Mr. Weber said Mr. Hamers
had been cleared of any blame in the matter and that UBS considered
the incident in making its CEO decision.
The UBS chairman declined to say how much Mr. Hamers will be
paid. Mr. Ermotti's base salary in 2018 was 2.5 million Swiss
francs ($2.5 million).
He said Mr. Hamers's lack of wealth experience isn't a
hindrance, since the bank has two of the industry's top executives
-- Tom Naratil and Iqbal Khan -- leading that business
division.
Other UBS executives who were considered to be potential
successors to Mr. Ermotti have left in recent years, including
former wealth management head Juerg Zeltner and investment banking
boss Andrea Orcel.
The bank's main rival, Credit Suisse Group AG, also named a new
CEO this month. Thomas Gottstein, formerly the head of its Swiss
business, succeeded Tidjane Thiam, who was forced to resign after a
spying scandal.
Write to Margot Patrick at margot.patrick@wsj.com
(END) Dow Jones Newswires
February 20, 2020 10:32 ET (15:32 GMT)
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