UBS’s Ermotti Starts the Race. His Job Is the Prize

Karofsky and Khan start as frontrunners to be the Swiss bank’s next boss.

Sergio Ermotti has made it clear he would only lead UBS Group AG in his second stint as chief executive officer for the time it took to absorb Credit Suisse and set the enlarged Swiss bank on a steady course. On Thursday, he reshuffled his top lieutenants to broaden the experience and exposure of his main succession candidates. The race is on.

UBS’s Ermotti Starts the Race. His Job Is the Prize

Ermotti isn’t going anywhere until at least the end of 2026 or early 2027, by which time the bank should have finished the integration of its erstwhile rival, bought for a tiny $3 billion in a rescue deal last spring. UBS should also be handing out more than $7 billion in dividends and buybacks by then too — Ermotti’s golden goodbye to shareholders.

UBS wants an internal candidate to take over from Ermotti. It has explicitly ruled out an external hire, according to an anonymously sourced Financial Times report this week. There are two main favorites and two potential challengers for the top job: Rob Karofsky and Iqbal Khan are the frontrunners, while Beatriz Martin and Sabine Keller-Busse could still be considered. The first two were the executives on the move in Thursday’s reshuffle. UBS Chairman Colm Kelleher has said he wants the succession to look like the playbook at his former employer Morgan Stanley Inc., which had three executives to pick from.

Karofsky has been running the investment bank globally since 2021 and is being put in charge of US operations and co-president of the wealth business. Khan, who previously had sole responsibility for Global Wealth since 2022 and was US chief, is now moving to Asia to run that region while sharing the wealth business with Karofsky.

Of the two, it is Karofsky who is really getting to broaden his experience, which also means he is being pushed away from his comfort zone. He is a highly personable executive who came up through the trading business. He joined UBS in 2014 and led a technology overhaul of equities at a time when the industry was going fully electronic and relying more on algorithmic trading and so-called dark venues. Karofsky was promoted to co-lead the investment bank in 2018 and took sole control when Piero Novelli retired in 2021.

Khan, meanwhile, joined UBS from Credit Suisse in 2019 making a smart exit from that troubled bank after a spectacular falling out over garden design with his then CEO Tidjane Thiam. That led to a spying scandal with Credit Suisse inexplicably tailing Khan and his family around Zurich in an effort to stop him poaching more staff. Thiam was eventually forced to resign over the affair.

Khan, a former consultant who keeps a low external profile, only worked in wealth management at both banks. His challenge continues to be rebuilding trust among Credit Suisse’s rich clients in Asia, who were instrumental in that bank’s failure by rushing to pull their money. Khan will need to show he can encourage the Asian superrich customers to make more use of UBS’s investment bank – and vice versa. Khan is a great salesman, but he’ll also need to somehow demonstrate a proper grip of risk and operations if he is to become CEO.

Keller-Busse is a Swiss national, well plugged in to the country’s elites, with a long career at UBS. She currently runs the core Swiss bank and was previously head of the Europe, Middle East and Africa region. She has also been group chief operating officer. Such characteristics mean she can’t be counted out of the running.

Lastly, Martin has a portfolio of jobs, running EMEA and the non-core unit, which is responsible for managing and offloading all the bits of Credit Suisse that UBS doesn’t want, while also being in charge of the group’s policies on sustainability. Her background is in markets and trading and she joined UBS in 2012 to be chief of staff to Andrea Orcel, currently CEO of UniCredit SpA, when he was head of UBS’s investment bank. That’s a set of jobs that suggest high energy and competence to say the least.

It’s a good list of capable executives, but it is Karofsky and Khan who will be most under the microscope in the next few years. UBS’s integration work will go on for a while, but with the main decisions made, the legal entity mergers nearly finished and the strategy in place, the focus for investors is how and where the bank can grow. US and Asian wealth have to lead, with the investment bank a business in service to those arms. It won’t necessarily be the executive who delivers the greatest gains in their region who gets to be CEO, but that certainly wouldn’t hurt.

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Paul J. Davies is a Bloomberg Opinion columnist covering banking and finance. Previously, he was a reporter for the Wall Street Journal and the Financial Times.

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