Sergio Ermotti so angered UBS’ board over his handling of a potential CEO successor two years ago that he was put on notice to leave by this autumn, finews.com can reveal.

Seventeen months after losing top executive Andrea Orcel, the departure continues to reverberate for CEO Sergio Ermotti. The long-standing UBS boss irked his board with his handling of the departure, three sources familiar with the events told finews.com.

The 12 directors presided by Chairman Axel Weber were so angered that several weighed dismissing the CEO over what they perceived as being caught out in the extreme, one person familiar with the board’s discussions said.

Two Years – At Most

Ultimately, they stopped short of dismissing Ermotti, but UBS’ board put the CEO on notice that he would run the Swiss wealth manager for another two years at most, the person said.

«The board discussed this matter intensely,» one of the three people familiar with their discussions said. «They told Ermotti he shouldn’t plan to be CEO in two years' time,» another of the people said. A spokesman for UBS said the claim is «absolutely false» and unfounded.

The episode fits neatly into the puzzle of UBS’ succession planning, which culminated two weeks ago in the surprise hire of ING boss Ralph Hamers to replace Ermotti in November: The Swiss banker is leaving the top spot at UBS exactly two years after his board informed him of the deadline.

Livid Directors

UBS’ directors – at that time, Weber, David Sidwell, Isabelle Romy, and Michel Demare were the committee tasked with succession – were livid at what they perceived as being hamstrung by Orcel’s exit. Romy and Demare have since left the body.

A person familiar with Ermotti’s thinking disputed this version of events. His pay was kept nearly unchanged in 2018 at 14.1 million Swiss francs for the year the episode took place. That year, the board lauded him «strong attention to talent development, succession planning, and internal mobility» in its annual report.

Door Closed

It is unclear how Ermotti, a proud and sometimes emotional banker credited with orchestrating UBS’ post-crisis restoration, responded to being put on notice.

Orcel, the Italian star banker at the heart of the dispute, was a promising internal succession candidate before he left for another CEO job – which later fizzled.

The 2018 spat between Ermotti and UBS’ directors would have effectively closed the door for the CEO to ever advance to the board. It also raises uncomfortable questions for Weber, whose weekly meetings with Ermotti are the primary channel between board and top management.

Succession Search

For UBS, the Orcel episode sounded the starting gun of a succession search in earnest. The Swiss bank spoke to ex-Bofa Merrill Lynch top investment banker Christian Meissner about a role, which didn’t come to fruition.

Meanwhile, Weber effectively aired the process in ill-advised public comments early last year, which he later apologized for the clumsiness of. Then last summer, UBS replenished its management ranks by poaching Credit Suisse’s top private banker

C-Suite Overhaul

At 43, Iqbal Khan represents a much-needed rejuvenation of UBS’ C-suite, where the average age of 13 top executives is 56. For Ermotti, 2019 was marked by a setback in a key French criminal trial, which will spill over into Hamers’ tenure.

The bank’s share price crashed through 10 Swiss francs to a seven-year low, one of several factors that led to a drop in pay for Ermotti last year. It ended well: On Tuesday, Swiss Re said it would nominate the nearly 60-year-old UBS veteran to replace its long-standing Chairman Walter Kielholz next year.