Few bankers shaped the Swiss banking industry as dramatically as Marcel Ospel. finews.asia on the late banker's crucial misjudgments about the vulnerability of Switzerland.
The Swiss ex-chairman of UBS, Marcel Ospel, who died on Sunday after a long battle with cancer, is one of the biggest and most defining personalities in contemporary Swiss banking. Few Swiss bankers thirsted for size and global dominance as he did in a career spanning 43 years.
As head of Swiss Bank Corporation, or SBC, and later UBS, he was the linchpin in a series of deals which define the bank to this day: S.G. Warburg in the U.K., Paine Webber in the U.S., and the merger of SBC and Union Bank of Switzerland to create the largest bank in Europe in 1998.
Play for Merrill Lynch
Ospel even wanted Merrill Lynch at one time – at 30, he had left Switzerland to work for the U.S. bank in London and New York. The two years at Merrill armed him with a sense of Wall Street's brash methods. He quickly assimilated a bolder, more ambitious way of doing business into his repertoire.
In this respect, Ospel was miles ahead of his colleagues in Swiss banking in the 1980s. He returned to Switzerland and SBC and quickly set about rousing the somewhat sleepy bank. His quick ascent from apprentice to C-suite and boardroom is a unique success story – marked by a repeated failure to recognize the vulnerability of UBS and of Switzerland itself.
Driving Hard Deal
Ospel underestimated the consequences and reach of his actions several times: under his auspices, UBS failed to lend to Swissair following the 9/11 attacks in 2011. The back-story was that Ospel and several associates from his native Basel had planned for a smaller rival, Crossair, to fill the breach. The Swiss banker appeared to factor in that the flagship carrier's troubles could lead it to declare insolvency. Crossair never fully lifted off for unrelated reasons, and Swissair, of course, went under.
Two other episodes – both after he was ousted in 2008, but directly related to his actions – are equally illustrative. UBS was forced into a Swiss government rescue in October 2008 following more than $50 billion in subprime-related losses. At the same time, it was forced to hand over confidential data on its wealthy clients to U.S. prosecutors – the beginning of the end for Swiss banking secrecy.
Institutional Weakness
In both instances, Ospel misjudged the strength and wherewithal of Switzerland's institutions in the 21st century – the era of total globalization, but also of an epic shift in values which would no longer tolerate the Swiss «Sonderfall,» or special rules for Switzerland that Ospel embodied.
Ospel's lavish pay is also exemplary for the shift in values and moral compass: in 2005, when UBS began disclosing pay, he took home almost 24 million Swiss francs ($24.7 million). Shareholders approved it, but it is no coincidence that small businessman Thomas Minder launched an ultimately successful political initiative the same year to cap executive pay.
The pay curbs are emblematic of how fragile the Swiss business establishment's hold over politics had been – or in other words, the people had had enough of what they viewed as executive CEO pay.
