The latest reforms of UBS’ private bank underscore the rising star of one of its bosses – and the career twilight of the other. finews.com reports on what the revamp means for Tom Naratil.
Tom Naratil, the co-head of UBS’ $2.5 trillion private bank, was almost an after-thought during the Swiss wealth manager’s latest restructuring. The American banker co-signed a memo outlining the dispersion of a super-rich unit and merger of a product engine with UBS’ investment bank – but the imprint of the plan was straight from the playbook of Iqbal Khan, his co-head of four months.
UBS is expecting Naratil, who turns 59 this year, and Khan to jointly remain at the helm of the unit until roughly mid-2021, according to a source familiar with a plan discussed on UBS’ board.
Coming Full Circle
«It will be pretty smooth; this isn’t two 40-year-olds fighting for the same job,» the person said. At least 18 months together is planned to «coincide with the retreat of Naratil from that job – he’s really come full circle at UBS.»
A spokesman for UBS denied the plan «Tom Naratil is fully focused on bringing global wealth management to the next level together with his colleague, Iqbal Khan,» the spokesman said.
Uneven Partners
The dual structure underscores a 2018 merger of UBS’ U.S.-based brokerage with its wider white-glove private bank elsewhere. Khan (pictured below) and Naratil are uneven partners who need each other – for now. The scrappy, determined 43-year-old ex-Credit Suisse top executive needs Naratil’s impeccable power base and network at UBS – especially in the coming 18 turnaround months.
In turn, Naratil, a «lifer» who began his career as an intern at Paine Webber Jackson & Curtis in 1983 (the stockbroker was acquired by UBS in 2000), needs Khan to push through changes in the Swiss bank’s strategy for the rich. The reforms both men unveiled this week represent a tacit admission that Naratil’s initial plans, with then-head Martin Blessing, foundered.
At some point in the back end of next year, Naratil is expected to cede the job, according to the person familiar with discussions in UBS’ board. UBS wants the veteran, who is known as one of CEO Sergio Ermotti’s closest associates internally, to remain as a vice-chairman or senior adviser to the bank.
Credit Suisse Resemblance
The Americas overseen by Naratil are the largest chunk of the unit, by assets and profit – if not by performance. The region, which includes Latin America, reported no inflows in the third quarter. It spent 85 cents for every dollar it earns – a far clumsier cost-income ratio than in Asia or the European and Middle East business, where the metric hovers around 70 percent.
It isn’t clear whether the plan for Naratil's exit paves the way for Khan to then run the unit alone. The younger banker needs time to burnish his credentials at UBS – that means for the restructuring to bear fruit.
Netflix-Worthy Spy Saga
Its striking resemblance to one from Khan’s four-year tenure at Credit Suisse – delegating more say-so back to the regions, loosening purse strings for lending, and grabbing a bigger chunk of the fee from products generated for wealthy clients by UBS’ investment bank, with the requisite risk – makes clear his hand in it.
The other uncertainty in Khan's career planning is a lingering spy scandal. The Netflix-worthy affair has escalated on several fronts: Khan now faces a criminal complaint from the surveillance firm, the Swiss financial regulator is investigating at Credit Suisse, and a Zurich prosecutor is looking into Khan's complaint.
CEO's Complication
Naratil’s professional stock at UBS soared after the financial crisis, when he was summoned to Zurich as its finance chief, and he remains extremely highly regarded in Zurich. Ironically, Naratil remains one of the top candidates to succeed Ermotti in the very short term – even as his career winds down.
Ermotti himself, who is believed to also have begun counting down to his exit, is the biggest potential complication in the wealth handover. This would put the CEO as well as wealth co-head Naratil on track to exit around the same time – and a double vacancy in UBS' management for Chairman Axel Weber to cope with.
