UBS Group has named ING boss Ralph Hamers as successor to Chief Executive Sergio Ermotti, becoming the second major Swiss lender this month to replace its CEO.
In a surprise announcement late on Wednesday, UBS said Hamers would in June leave the retail and corporate lending franchise he helped build up during a 29 year career at ING to join the world’s biggest wealth manager in September.
Ermotti has spent close to a decade at UBS, winning plaudits for overhauling its strategy after the financial crisis, cutting its investment bank and growing wealth management.
But the Swiss lender missed its profit and cost targets for 2019 amid ultra-low interest rates in Europe and increased competition from U.S. rivals, forcing Ermotti to dial back some of its goals. UBS shares fell sharply last year, hit by a 4.5 billion euro ($5 billion) fine in a French tax fraud case.
Hamers, whose appointment comes after Credit Suisse earlier this month named Thomas Gottstein as CEO to take over from Tidjane Thiam who resigned following a spying scandal, will take up his new post on Nov. 1.
ING did not immediately disclose its plans on finding a new chief but said a succession process would begin “if and when appropriate”.
ING shares opened up 2.2% on Thursday, having fallen sharply on Wednesday after it abruptly canceled a planned bond issue ahead of the Hamers’ announcement. UBS shares were up 1%.
Hamers’ appointment ends speculation that star wealth manager Iqbal Khan, who joined UBS last year from Credit Suisse, could be in line to replace Ermotti.
“Ralph is the right CEO to lead our business into its next chapter,” UBS Chairman Axel Weber said in a statement. “As the industry undergoes fundamental change, Ralph is the person to lead UBS’s continued transformation”.
Two people familiar with the matter said UBS had decided to look outside the bank for Ermotti’s successor, after the departure of investment bank head Andrea Orcel in late 2018 meant there were few internal candidates seen having enough experience to take over.
Digital transformation
During his seven-year stint as ING CEO, Hamers steered the lender to profitability while repaying the Dutch government money it received during the financial crisis.
Under his watch the bank has also invested heavily in its digital transformation, relying far more on its online offering and less on a big branch network than most of its rivals, meaning it has one of the lowest cost-to-revenue ratios in Europe.
His successful digital strategy is likely to have been one of the biggest attractions for UBS, although his lack of experience in investment and private banking will raise eyebrows among some staff at the Swiss bank.
Hamers’ image was dealt a blow in 2018 when ING was fined a record 775 million euros by Dutch prosecutors for failing to detect money laundering and other criminal activities financed through its accounts for years. Earlier that year, ING scrapped a planned 50% pay hike for Hamers, after the plan had sparked widespread criticism in the Netherlands even though ING Chairman Jeroen van der Veer maintained that Hamers had been underpaid for years.
He is likely to receive a hike at UBS. Dutch pay caps mean Hamers was one of the lowest paid CEOs among major European banks, taking home 1.75 million euros in 2018 - with his bonuses scrapped due to the money laundering fine. Ermotti received 13.8 million Swiss francs ($14 million) in 2018, excluding benefits. Hamers is the second high-level executive at ING within a year to leave the Netherlands, after management board member Roeland Berkhout moved to Commerzbank in July last year.
