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Morning Coffee: UBS might want a new CEO if Sergio Ermotti burns out. Former Apollo subsidiary offers the best job on earth

It is probably a mistake to read too much into an unrehearsed response to a direct question at a conference.  But on the other hand, speculation about leadership succession is always fun, and Colm Kelleher’s comments on Sergio Ermotti are particularly interesting.

For one thing, they reveal that the plan for Ermotti’s second term as CEO was always meant to be for a good time rather than a long time. At the original dinner between him and Kelleher, they agreed that part of the deal would be that the two men would collaborate on drawing up a list of successors. 

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However, the time may not be all that good. Kelleher acknowledged yesterday that the “easy” work of firing people at Credit Suisse/UBS is already over, and that from 2024 it will be about the “sticky” costs in IT, data and control functions, which are far less "easy" to deal with.  

Once Sergio has steered UBS through this storm, he will likely cede the CEO role to the next generation. According to Kelleher, “there is a lot of life in [Ermotti], but he is not as young as some people”.  That might be considered a bit cheeky – Sergio Ermotti is 63, Colm Kelleher is 66 and that’s not particularly old by the standards of Wall Street.  Jamie Dimon, after all, is 67 and Bank of America’s Brian Moynihan is 64; neither has a set leaving date.

On the other hand, Ermotti was plucked out of retirement already. And we now have an example of the perfect CEO succession in James Gorman of Morgan Stanley. Gorman is 65 and will be leaving at the end of the year. Kelleher spent most of his career at Morgan Stanley, and voiced his hope that UBS's succession plan would be executed as seamlessly as the transition from Gorman to Ted Pick. Kelleher may also have been remembering the time he himself was passed over at Morgan Stanley, despite having been seen by many as the natural heir to John Mack.  The gracious and constructive way he handled that episode did Kelleher’s reputation a huge amount of good, although it’s notable precisely because grown-up behaviour is so rare at the top levels of investment banking.

Ermotti therefore has a role model in a gracious exit. However, things will need to change at UBS.  When Ermotti left in 2020, there was quite a bit of ill feeling at board level that there wasn’t a natural successor, and many people (including Colm Kelleher) thought that Ralph Hamers was a poor choice.

The most obvious internal candidate once Ermotti has done all the hard work on the restructuring is still Iqbal Khan.  Khan is famous for inspiring a great deal of personal loyalty among his senior executives, and is highly ambitious. There have always been rumours that the breakdown of his relationship with Credit Suisse had as much to do with over-aggressively positioning himself as a CEO-in-waiting as they did with arguments over shrubbery.  If UBS don’t promote him, they could easily lose him and he’s not easy to replace.

This might be difficult in a scenario where Kelleher wants a process with multiple credible candidates (and Andrea Orcel will presumably at least get the chance to say no). The job looks like it’s Khan’s to lose.  But it also depends how long Ermotti can stay in the flames.

Elsewhere, the luxury ski resort company Vail Resorts was once called “Apollo Ski Company”; it was one of the first investments the private equity giant made.  Although times have changed, and for one reason and another people aren’t keen to admit that there was ever a “Leon Black Family Ice Rink”, the company is still of significant professional as well as recreational interest to bankers. 

Now Litquidity have noticed that they’re advertising for a Vice President of Investor Relations, who will also have responsibility for strategic development and supervising an M&A pipeline.  The salary is $250k-290k, plus an annual bonus and some equity.  Plus a free ski pass, which is another $1,025.

Weirdly, the job is also offering remote working as a potential benefit – surely this is one case where you’d want to come in every day?  Candidates are expected to have “passion for Vail Resorts’ business strategy and product” as well as 15 years experience with at least 10 in M&A. 

Meanwhile …

For Goldman Sachs, the fact that everyone wants to hire its people has always been somewhere between a flex and an annoyance.  In the field of AI coders, however, it must surely be toward the “annoyance” end of the spectrum.  According to the consultancy Evident, having been among the first firms on Wall Street to seriously staff up in this area, Goldman has now become a target for poaching, losing a net 60 staff to rivals.  Citi was also a net provider of AI talent, while Wells Fargo and JP Morgan were net buyers.  These flows are not necessarily all that large compared to the number of people who didn’t move, but they demonstrate how competitive this area is – the median comp for AI staff was over $900k in the USA and $676k in Europe. (Bloomberg)

Increasingly the advice is that if you’re going to Hong Kong, take a device which doesn’t have any data you don’t want compromised on it. Pragmatically, this could be a good excuse if compliance ask why you’ve got a burner in your desk drawer.  (FT)

Tragic story of a young lawyer who died after taking cocaine laced with fentanyl – her father, an investment research firm founder, is campaigning in her memory to improve drug policy. (Financial News)

Apparently “Succession” is quite close to the mark.  A survey of family office employees (including senior family members) finds that roughly half of them think that the younger generation is “inadequately qualified to assume leadership”.  The main problem is that they’re just too young, although “infighting” is a problem for 13% of family offices, just behind “health of family leader”. (Institutional Investor)

Bernard Mourad, formerly of Morgan Stanley, has had an interesting few years since leaving the bank; he’s worked for Altice, on Emmanuel Macron’s presidential campaign, for Bank of America and in “various business ventures”.  But he’s never wholly forgotten Morgan Stanley, or the €1.5mn deferred compensation he left behind there.  He won a case in 2019 that he was entitled to keep it under French law; MS is appealing that it should have been judged under New York law, and the case is back in court. (Bloomberg)

“Anthem” and “Bridger” are the names of two of the programs Balyasny Asset Management runs to ease new hires into the sometimes frightening world of “pod shop” hedge funds.  (Business Insider)

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AUTHORDaniel Davies Insider Comment

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