UBS' hire of Iqbal Khan to co-run its $2.48 trillion private bank is a coup. The ex-Credit Suisse star's leeway to hone UBS' wealth strategy may prove limited.

The response to Iqbal Khan's hire at UBS connects seamlessly to how frenetically he was feted when his exit from Credit Suisse was made public less than two months ago: then, the 43-year-old basked in applause at his last staff meeting.

Khan earned superstar status as the only Credit Suisse business head to hit targets in an exhaustive three-year revamp. The international private bank hiked revenue, pre-tax profit, and gross margins every year since 2015.

Deftly Empathic

In the process, Khan grew into a talented and charismatic leader – so much so that he inevitably aroused the ire of his equally engaging boss, Tidjane Thiam, as finews.com reported last month. Khan also deftly deployed his emotional intelligence with the super-wealthy, according to colorful anecdotes reported by «Bloomberg».

UBS had him on its radar screen as early as 2015, when Thiam promoted him into the private banking job. Then-UBS wealth boss Juerg Zeltner was keenly aware of Khan's potency, warning lieutenants to monitor the Credit Suisse banker's plans and strategy closely, according to a UBS banker.

Skillful Leaders

Accordingly, expectations for Khan, born in Karachi the son of a Pakistani father and a Swiss mother, are high. At UBS, he is expected to jumpstart the flagship wealth management unit, which is under pressure as profitability declines.

«Both of them bring strong leadership and people skills along with a track record of successful execution,» UBS boss Sergio Ermotti said in a statement of Khan and Suni Harford, who is also joining top management. «They are great additions to the team and will help us drive sustainable growth and profitability for UBS.»

UBS Strategy Set

Khan might not be as free to make changes at hidebound UBS as he was at Credit Suisse, a far more free-wheeling corporate culture. Last year, Ermotti and his team presented few new initiatives at UBS' first strategy update since 2014.

Part of future plans for the unit can be drawn from a memo outgoing private bank co-head Martin Blessing sent to staff on Thursday and seen by finews.ch: China forms the backbone, Blessing indicated.

Uncomfortable Questions

He also flagged more tie-ups in the mold of a June pact with Sumitomo in Japan. In Europe, by contrast, the bank needs to restructure its onshore activities, Blessing acknowledged. 

The German banker was well-liked by his troops, but failed to put his stamp on the wealth manager. Blessing's relative inertia during his 19-month tenure raises the question of whether Khan will be afforded enough freedom to ask some uncomfortable strategy questions when he starts at UBS.

Hidebound, Risk-Averse Culture

For example, Khan leaned heavily on lending to boost Credit Suisse's new assets from rich clients: Lombard loans quickly became a key driver of revenue for the Swiss bank. To do the same at UBS, he would have to instill a risk-friendlier approach with UBS' 3,600 private bankers – in a culture where Ermotti has repeatedly emphasized quality over quantity of assets.

In addition, the wealth unit Khan oversaw at Credit Suisse was showing initial signs of stagnating in the first half; it is questionable if he can repeat the growth of the last three years against the dismal backdrop of permanently low interest rates and a slowing global economy.

His move to UBS is of course predominantly a huge opportunity for Khan: if he can restore growth at the Swiss giant and thus enliven investor's interest, his ascent to Ermotti's job is secured.