Three years ago, top executives including ultra-rich banker Josef «Joe» Stadler; domestic trouble-shooter Karin Oertli; Evidence Lab boss Barry Hurewitz; investigative head Emma Molvidson; and top Japanese private banker Victor Chang met for a twice-yearly confab overseen by CEO Sergio Ermotti near Zurich.
After a day of meetings, the executives, part of a cadre of influential bankers at the Swiss wealth manager in the rank of «group managing director,» or GMD, were grouped for a team-building event. The challenge? The bankers had to change a race-car tire. Caroline Stewart, now finance chief of UBS’ investment bank, was on the winning team.
As ING CEO Ralph Hamers prepares to take the top spot at UBS in November, the elite squad is coming into clearer focus: the title was introduced in 2010, and ranks have swelled under current CEO Sergio Ermotti. Several sources report that the system clogs the pipes in decision-making – something Hamers will have to tackle when he takes over.
Now at more than 100, the executives form a kind of Praetorian Guard around the C-Suite, as one observer put it. For the most promising of the top executives, the GMD status is a way for the bank to illustrate the glide path into top management.
It would be natural for Hamers to begin trimming their ranks. Besides being numerous, they are costly: GMDs make up part of 675 key UBS risk-takers, a group that took home a cumulative $1.25 billion on pay and bonuses last year (or nearly $2 million on average). They outrank the ladder of associate directors, directors, executive directors, and even MDs.
Because they outrank nearly everyone and because they tend to be well-connected, GMDs can propel projects or ideas and mobilize resources even when times are tight. They are a powerful faction to woo because they wield great influence at UBS, which remains a hierarchically-run bank. Unlike vice-chairmen, aa role considered a largely symbolic consolation prize, the GMDs are operationally active.
Perks for the GMDs like a private gym at one of the bank’s Zurich offices have raised eyebrows at home. The group is undoubtedly high-octane: part of the aim of designating a banker even more than a managing director is to keep them from defecting.
That’s what long-standing wealth manager Juerg Haller, who has held both the GMD as well as subsequently the vice-chairman title, did recently: Haller is now chairman at family-controlled rival J. Safra Sarasin, a rival to UBS.
GMDs enjoy other perks too: they are part of the same bonus pot that top management enjoys – so-called equity ownership plans – but their lock-up is shorter. The awards, like for Ermotti and his C-suite colleagues, can be clawed back if the wider unit’s performance disappoints.
Part of the reason the rank – not the people themselves – are likely in for more scrutiny is that the process of getting there is completely opaque and at least partly political. Other banks have similar «super MD» statuses. Goldman Sachs, for example, held onto the «partner» designation when it went public.
But unlike at the U.S. investment bank, where prospects are vetted by a committee and subjected to a series of interviews with partners around the world, UBS’ process is murky. The GMD status just appeared, and UBS has never given a satisfactory explanation of what the criteria is, a former UBS banker said. The bank also doesn’t disclose who is a GMD.
UBS said its GMDs are its most senior leaders, under top management with a key responsibility to drive success for the whole group across businesses and functions, together with their teams. The Swiss bank declined to detail their role, number, or criteria for advancing to the rank of GMD.
Several sources said the group is currently 100+ bankers, 60 of them in Switzerland, mainly in Zurich. The group is viewed as special within UBS, but the GMD status isn’t a shield against their stars dimming, a person familiar with UBS’ staff practices said.
Typically, GMDs are afforded more time to look for another option at UBS if their roles are restructured: the process if somewhat more collaborative than with regular managing directors or other employees. «The GMDs are very actively managed, but it’s a much friendlier process than elsewhere,» the person said.
