BUSINESS
07/01/2011 08:54 am ET | Updated Aug 31, 2011

UBS Names Ex-Bundesbank President Axel Weber As Next Chair

ZURICH (Martin de Sa'Pinto and Caroline Copley) - Swiss bank UBS (UBSN.VX) on Friday named former Bundesbank president Axel Weber as its next chairman in a surprise move that robbed rival Deutsche Bank (DBKGn.DE) of a top candidate to succeed its chief Josef Ackermann in 2013.

Weber shocked the European financial establishment by announcing in February he would quit his role as Bundesbank chief, leaving Berlin without a candidate to succeed Jean-Claude Trichet as president of the European Central Bank -- an institution Weber felt was straying too far from its inflation-fighting mandate.

He is likely to take a more prominent role at UBS than current chairman Kaspar Villiger, a former Swiss finance minister who was coaxed out of retirement to help restore market confidence in the bank after it suffered the worst annual loss in Swiss corporate history during the financial crisis.

"Villiger was always seen as a temporary solution to help UBS get through the crisis and Axel Weber's clearly got more of a connected network into the international banking industry," said Cheuvreux banking analyst Christian Stark.

UBS's smooth succession planning contrasts with the difficulties seen at its German rival Deutsche where Ackermann, chairman of the executive board, extended his contract for four years in 2009 after the bank failed to find a successor.

"We think this is a smart move," Florian Esterer, senior portfolio manager at Swisscanto, which manages 57.6 billion francs in assets and holds UBS shares worth more than $180 million, said of Weber's nomination to the chairmanship.

"He knows banking inside out, it could work out very well for UBS," he added.

The UBS move is a coup for the Swiss bank and for Weber -- a man who has never been afraid to ruffle feathers.

As Bundesbank chief, he clashed with Nicolas Sarkozy when the French president leaned on the ECB to cut interest rates.

He also infuriated the German government by pulling out of the ECB presidency race without consulting Chancellor Angela Merkel -- a decision rooted in his opposition to the central bank buying bonds and straying from its inflation-fighting role.

AN OFFER HE COULDN'T REFUSE

UBS said Weber, who will be the first non-Swiss to head the bank, would get a basic salary of 1.5 million Swiss francs as vice-chairman, as well as 150,000 UBS shares, which will be restricted from sale for four years.

UBS' offer was too attractive for the German to turn down, a source familiar with the matter said, adding Deutsche Bank had not made the former Bundesbank chief an offer.

Weber, who was in Zurich on Friday, will move to Switzerland when he takes up the post at UBS, the source said. He has been working at the University of Chicago on a one-year teaching post since leaving the Bundesbank in April.

UBS (UBS.N), Europe's largest wealth manager by assets, said it would nominate Weber to the board at the annual general meeting in May 2012, and that he was expected to take over from 70-year-old Villiger in 2013.

Swiss National Bank Chairman Philipp Hildebrand welcomed Weber's nomination as a "pleasing development for the bank and for Switzerland as a whole," adding:

"For UBS, the nomination has brought clarity to one of the main long-term management issues, and this can also be assessed very favorably with regard to the outlook for the bank."

UBS has lost a series of high-profile bankers to rivals this year across various regions after a bonus round which disappointed many.

Weber's appointment may help to stem that tide.

"If you're about to lose another senior banker, to get a call from Axel Weber to tell him why he should stay is quite a powerful thing to have," said Chris Wheeler, analyst at Mediobanca.

As chairman, Weber's salary will rise to 2 million Swiss francs and 200,000 UBS shares, also locked in for four years.

As part of his remuneration package Weber will also get 2 million Swiss francs and 200,000 shares, locked in for a year, as a one-off payment on joining the board in 2012.

Weber, aged 54, was president of Germany's central bank, the Bundesbank, from April 2004 to April 2011 and was a member of the Governing Council of the ECB.

The Bundesbank said it would discuss Weber's request for permission to take the UBS board seat at its July 12 meeting -- a process seen as a formality.

(Additional reporting by Philipp Halstrick and Paul Carrel in Frankfurt and Sarah White in London; Editing by Mike Nesbit)

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