UBS quickly drew a veil over the real reasons for the sudden resignation of Chief Executive Peter Wuffli, but traders said it may be linked to the embarrassing closure of a hedge fund earlier this year.
"We are not going to discuss any further details in public," UBS Chairman Marcel Ospel told a conference call with financial journalists, adding that the board of the Swiss bank had taken a decision late last week it felt "comfortable with."
The sudden change, announced late on Thursday, followed calls from critics for UBS to boost results and even consider breaking up the company -- by getting out of investment banking
and focusing entirely on wealth and investment management.
Ospel himself acknowledged that financial markets may have been taken aback by the announcement, but he affirmed the bank's strategy of keeping investment banking and wealth and asset management under one roof.
"The changes might look unsettling at first glance, but be assured we intend to act as one firm focusing on growth," he said. "There is no disagreement on strategy."
UBS shares were up 0.8% in early trading.
Wuffli, who will leave the bank in the next few days, will be replaced by his deputy, Marcel Rohner, who headed the group's wealth management business, the world's largest with more than 3 trillion francs ($2.5 trillion) of assets under management.
Despite Ospel's strenuous denials of any internal disagreement over strategy prior to Wuffli's departure, the move may prompt speculation the bank has been unnerved by the rising tide of criticism from some investors.
Hedge Fund Embarrassment
UBS suffered embarrassment earlier this year when it said it was shutting down its hedge fund arm, Dillon Read Capital Management, after its first-quarter losses of at least 150 million francs linked to subprime mortgage woes in the United States.
Some traders in Zurich said the fiasco at Dillon Read may have been one of the reasons for Wuffli's departure. Analysts have said in recent months there could be more losses to come at
"Speculation over a possible departure of Wuffli was in the market for some months since the hedge fund problems became known," said one trader.
Rohner, Wuffli's 42-year-old successor, will have to persuade investors that UBS can punch its weight in investment banking as effectively as in wealth management.
Some analysts say that, although UBS is a world leader in private banking, it simply cannot match the firepower in investment banking of leading rivals in the United States such as Morgan Stanley and Goldman Sachs.
Although Ospel declined to elaborate on the precise reasons for Wuffli's sudden removal, he suggested the business was performing well and that UBS expected to announce good results
for the second quarter.
But the wording of his remarks also left open the possibility for less welcome news.
"Second-quarter results on Aug. 14 will contain both positive and negative swings," said Ospel. "All the available information suggests the results will be broadly in line with market expectations."
He said Wuffli would not receive any special severance payment beyond salary due and a package of executive incentives.
Under the changes, Ospel, 57, has agreed to stay on for at least three more years. His proposal that Wuffli should succeed him as chairman was rejected by the bank's board.