The board of UBS made a bold move this week when they replaced
chief executive Ralph Hamers with his predecessor Sergio Ermotti to lead the takeover of Credit Suisse.
“It’s about having the best person in our opinion to effect the execution of this merger,” said UBS chair Colm Kelleher. Ermotti’s experience restructuring UBS’s investment bank and working at a global level were essential for overseeing the merger, he said.
Kelleher admitted to calling Ermotti on Monday last week. Hamers – who had struggled to get established at UBS – had fumbled an analyst call the night before,
reinforcing the board’s concerns about whether he could handle such a complex merger.
Retention is high on UBS’s list of priorities, though. Swiss private banks – including Julius Baer and Pictet – are trying to
capitalise on the uncertainty and bonus cuts at Credit Suisse to poach its top employees and clients. “The best people don’t wait,” said one senior executive.
Central banks ride the turmoil
Meanwhile policymakers are beginning to face a post-mortem on banking failures.
In a congressional hearing testimony Michael Barr, the Fed’s vice-chair for supervision, laid
blame for the collapse of SVB firmly at the bank’s door, saying it made a number of errors as it expanded including not managing interest rate risk effectively.
He also said implementing the Basel III reforms was “critical”. These rules require banks to keep certain amounts of capital to hand and maintain particular leverage ratios.
The BoE struck a similar tone at a Treasury select committee hearing this week too. Governor Andrew Bailey
reassured politicians that the UK banking sector is “very strong”, but noted that policymakers were thinking about tightening rules for banks.
The ECB must have some confidence too as
it approved UniCredit’s aggressive €3.34bn share buyback programme. Along with a dividend, investors will receive a hefty €5.25bn.
The approval came ahead of the bank’s AGM this week – when investors will also be voting on part of chief executive Andrea Orcel’s significant pay packet.
Big tech tries to look small
The sprawling
Alibaba this week announced it will split into six business units. Each will have their own board and chief executive, and can opt to go public.
The new groups will focus on cloud computing, ecommerce, local services, logistics, digital commerce and media. Alibaba will be a holding company, with the
top brass noting that they could be fairly hands off if the businesses list.
The move ticks a number of boxes. “We need to figure out how to really make the organisation simpler and more agile,” said Alibaba chief executive Daniel Zhang. Investors hope that splitting the unwieldy group will unlock value.
The restructure will also hope to court favour with the Chinese authorities. In 2020, a public attack on China’s financial watchdogs and banks by Alibaba founder Jack Ma sparked president Xi Jinping’s crackdown on large tech companies.
Chinese tech stocks rallied on the back of the news and a public appearance in mainland China by Ma on Monday – the first in a year – as traders hoped Xi’s crackdown might be easing.
But the disappearance of Bao Fan, founder of China Renaissance, will fuel concerns that it is not, argues Henny Sender, former chief financial correspondent.
The risk now is that China lifts travel restrictions and individuals move money out. “If they reopen the borders, then capital flight becomes a risk,” said one economist. “In the past, we saw money move first. Now people are trying to move. First the billionaires. Now the millionaires.”
Chairs, codes and tenures
The length of directors’ tenures has shot up the agenda recently.
Last week
Scottish Mortgage Investment Trust was shaken by a boardroom bust-up that claimed the scalps of three directors including its chair Fiona McBain.
Part of the blow-up was a criticism by Amar Bhidé about the length of McBain’s tenure – and this seems to have sparked something of an exodus.
On Friday,
Liontrust announced that two non-exec directors, Emma Howard Boyd and Quintin Price, had quit with immediate effect.
Sources say the pair stepped down in a row about how long non-executive chair Alastair Barbour has been on the board. Barbour has been chair for four years, but joined the board in 2011 – putting his tenure over the nine years recommended in the UK’s corporate governance code.
Back in Scotland another long tenure came to an end this week. Robin Barr – head of the Irn-Bru family dynasty – will
leave the board of AG Barr after 58 years. Barr will retain a stake in business and, if shareholders approve, will be replaced on the board by his daughter Julie.
Boardroom battle lines
There was an accord at Salesforce this week as
Elliott halted its plan to nominate directors. Jesse Cohn, managing partner at the activist investor, said he was “deeply impressed” by the company’s “commitment to profitable growth, responsible capital return and an ambitious shareholder value creation plan”.
But there was no such entente at Disney as the
chair of Marvel, Isaac Perlmutter, was given the chop. He had clashed with Disney chief executive Bob Iger, including backing Nelson Peltz’s recent attempt to get a seat on the board, which Iger saw off.
