Today's UBS annual general meeting is the last for CEO Ralph Hamers. With his departure, the bank loses a boss whose management style pointed to the future, and one who knows more about corporate transactions than Sergio Ermotti.
The gesture at the moment of defeat sums up Ralph Hamers as a manager. Last Wednesday when UBS surprisingly announced Sergio Ermotti as its new CEO, Hamers rose briefly at the beginning of the media conference, strode over to his successor on the podium, and showed him how to use his microphone so the public could hear Ermotti.
Even in this bitter personal moment, Hamers showed himself as a team player. Just nine days earlier, he was announced as the head of the UBS/CS bank project. He repeatedly said he accepted the board of directors' decision chaired by Colm Kelleher for the good of the bank and the Swiss financial industry, and that in his new role as advisor, he would support Ermotti and the management to the best of his ability.
Corporate Transactions Experience
Today, Hamers makes his last public appearance as CEO at its 2022 annual general meeting, the day after the raucous Credit Suisse event. While Ermotti will take the reins at UBS, he will leave the spotlight on his predecessor for this last event, after which Ermotti enters his second act as CEO.
Hamers has gained a wealth of experience with corporate transactions in his career. Over three decades during which he climbed the career ladder to the chief executive position at Dutch bank ING, he not only drove digitization, he sold several insurance companies and took the NN Group public in 2016, divested fund companies, and merged retail banks.
At UBS, he cast off private banking in Austria and Spain. Ermotti, who began his career as an investment banker in trading at Citicorp and Merrill Lynch, did not manage a significant deal in nine years during his first tenure at UBS. Ermotti conceded last Wednesday that he wants the bank to do so.
Share Buybacks Halted
Today's shareholder meeting will again show what UBS shareholders had to gain from the Hamers era. In 2022, a generally horrible year for wealth management, the world's largest private bank boosted profits, attracting $60 billion in new fee-generating money and ending up with $3.98 trillion under management. That allowed UBS to propose a dividend increase to its shareholders. That was put on ice because of the Credit Suisse acquisition.
The bank's stubbornly sluggish share price climbed by more than 16 percent under Hamers' leadership. Kelleher said last week a week the takeover was only possible because Hamers had helped the bank achieve the necessary strength during his tenure.
Making The Rich Richer
The legacy Hamers leaves behind within the group is somewhat difficult to fathom, and he was inclined to be misunderstood. When he took over in November 2020, the manager who doesn't care much for formalities, liked to introduce himself by saying «It's me, Ralph.» He had impressed upon the UBS staff that change would be the only constant under him. To the outside world, it seemed as if the CEO hardly touched the well-oiled asset management of UBS and gave his managers carte blanche. He prefers to work behind the scenes.
Hamers also took his time setting new goals for UBS. When these finally came, the audience rubbed its eyes: there was talk of a «purpose» that was to be placed at the center of the bank's activities. UBS was there to connect people, the CEO thought, and not just to further enhance the lives of the already rich.
A Sense of Purpose
This was scoffed at. The «Financial Times» (behind paywall) reported that Kelleher forbade Hamers to use the word «Purpose» in front of customers. By striving for purpose, Hamers created the necessary foundation for large investors to invest in the bank for the future. Companies that fail to align their existence with environmental, social, and governance (ESG) factors are increasingly running afoul of sovereign wealth and pension funds run on sustainable principles.
The focus on agile working models may also have been perceived as a fetish of Hamers, not least within the bank. The fact that youngsters were suddenly explaining to veteran bankers how the latter should work was not well received everywhere.
But if you take Hamers' specific mandate to make Switzerland's largest bank fit for the digital transformation as a starting point, the shift to agile, so common in the tech industry, was a logical one. The rapid expansion of the Key4 digital offering in Switzerland last year also demonstrated for the first time the method's usefulness. The «mega-anchor» showed itself to be more agile by refraining from large-scale projects in favor of smaller «proof of concept» solutions.
Team Approach for Top Management
Hamers was surprisingly consistent when it came to the flat hierarchies that agile working requires. He dropped titles across the board and pushed through the team approach even in top management. Since then, UBS executives have been measured by the success of the company as a whole, not just their respective roles, even when it comes to compensation.
But Hamers the Digitizer faced a major setback last year when UBS canceled its acquisition of US digital provider Wealthfront. The transaction would have been worth 1.4 billion Swiss francs and given the bank access to hundreds of thousands of mainly younger affluent clients in the US. But against the backdrop of the crash in technology stocks, the deal's numbers no longer made sense. According to reports, the calculating Kelleher hit the brakes.
Back to the Future
The big digital unicorn that everyone was waiting for failed to materialize under Hamers' leadership. Now, such a move is no longer likely to be an option in the medium term. The bank will be preoccupied through 2027 at the least. It has to deliver on the potential of a five-trillion-dollar asset manager while insulating itself against the possible dismantling of the Credit Suisse investment bank.
During those years, UBS will lack the capacity to transform itself into a modern multichannel bank and effectively defend its customer interface against new competitors. While Ermotti repeats his «Accelerate» restructuring act of the years following his first appointment as UBS CEO, the new UBS/CS is running out of time to become the bank of the future.
