UBS Announces New Investment Chief Executive

For the past four months, the investment banking side of UBS has been searching for a new chief executive. At no point was Jerker Johansson ever mentioned as a candidate, and with a 22 year career with rival bank, Morgan Stanley, no one was looking to the Swede to fill the top job, except UBS.

Speculation is swirling around whether Johansson would have left Morgan Stanley before mid December last year, as up to that point he was co-head of global sales and trading operations, but after the management re-shuffle, Johansson found himself to be vice-chairman whose responsibility was developing relationships with big clients at the bank.

Colleagues of Johansson have stated that he obviously missed the responsibility and authority that his former job entailed.

At this point at UBS, Johansson is facing one the most demanding management positions in the game

Slated to start in mid March, Johansson with be managing one of the hardest hit investment banks from the credit crisis, in which UBS lost $18bn, due mainly to the collapse of the subprime credit crisis, which UBS had large amounts of securities linked to.

Prior to the credit crisis, UBS was renown for their conservative risk controls, which has made the loss all the more harrowing. The bank has been forced to cut-back on jobs and risk taking, and enforce a disputed plan in which they pay most bonuses from 2007 in shares, in lieu of the normal cash.

UBS’s chief executive, Marcel Rohner, has announced the banks intention to slash their balance sheet and focus on their clientèle instead of proprietorial ventures.

Analysts have stated that UBS is intending to clearly represent the future for bank by hiring Johansson, who is a self-proclaimed fitness fanatic who partakes in cross-country skiing in his native land of Sweden. Johansson’s career at Morgan Stanley focused primarily on the equities business and expanding the client base at the bank.

He has been praised by former associates for his integrity and has been described as candid and direct. According to sources, Johansson’s unruffled demeanor is doubtlessly going to impress his Swiss superiors, who are growing a reputation for becoming more and more cautions of brazen American investment bankers.

There are still notable challenges in the path of Johansson, as he is coming into the senior ranks of a company he is not familiar with, and will have to establish his authority within. All this in a business still dealing with the credit crisis that erupted last year.

Analysts have also been quick to note that the area of concern with UBS, the management of fixed-income investments, happens to be an area where Johansson lacks experience. Speculation has arisen that Johansson will bring in reinforcements for this reason.

UBS is also looking to have Johansson advance the amalgamation of the investment banking side and the private banking sides of the bank.

The bank was one of the forerunners in perceiving the potential of uniting the two business sides, however they have yet to fully take advantage of the unification, as with smaller rivals such as Credit Suisse.

Investors are putting the pressure on UBS, and are suggesting that the current issues with the banks investment arm, are covering up the worth of its private banking arm

However executives at UBS are stressing their ongoing commitment to investment banking, but investors are waiting for them to add value before believing them.

The low profile of Johansson will sky rocket if he can successfully bring around UBS’s investment banking division.

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