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NEW YORK/ZURICH - PRESSURE on beleaguered Swiss bank UBS to break up intensified as activist investor and former chief executive Luqman Arnold demanded to meet UBS' board and shake up its governance and structure.
Mr Arnold's investment group Olivant said on Friday it controlled over 0.7 per cent of UBS' capital. That would make him one of the top 10 investors in the world's largest wealth manager, the bank hardest-hit worldwide from the subprime crisis.
UBS has rejected calls for sweeping changes, saying its dual focus on investment banking and wealth management is sound.
The bank has swept out almost all old management and seeks to raise a total of 34 billion Swiss francs (S$47 billion) in capital, after writing down around US$37 billion (S$51 billion) in bad investments borne of a breakneck expansion in investment banking.
Olivant posted a laundry list of requested changes to UBS in a letter to supervisory board member Sergio Marchionne - currently chief executive of automaker Fiat - and on its website (http://www.olivant.com/press-releases/).
'There is an urgent requirement for effective and relevant leadership of UBS's supervisory board, the establishment of appropriate corporate governance, forward thinking about future capital needs, a clearer and more focused corporate strategy, a fundamental overhaul of risk discipline and more open and transparent communication,' Olivant said in a statement.
Tables turn
Mr Arnold's return as an activist investor holds a twist of irony; he had served as CEO before being ousted in 2001 after a dispute over strategy with Chairman Marcel Ospel, who resigned this week due to the subprime catastrophe.
Mr Ospel will be replaced by in-house counsel Peter Kurer.
Mr Arnold believes UBS should separate its investment bank from its private-client bank and ultimately sell the investment bank, and its asset-management arm to raise capital.
UBS did not immediately return calls seeking comment.
The 2001 ouster by UBS of Mr Arnold, who is British, came just eight months after he had taken up his post, in what the bank at the time hailed as a move toward a more international management culture.
Mr Arnold was replaced by Mr Peter Wuffli, who in turn was sent packing in 2007. The group has long faced calls to split its wealth management and investment banking divisions, with some investors saying wealth management is what UBS does best.
After leaving UBS, Mr Arnold became chief executive of Britain's Abbey National and sold that company to Spain's Banco Santander.
A representative in Olivant's office in Singapore declined to comment. A call to Olivant's office in London and representatives in Zurich were not immediately returned. -- REUTERS
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