Merrill Lynch veteran Robert McCann, the new head of UBS's loss-making US wealth management unit, said he had no plans to sell the business that was battered by a high-profile tax row. McCann, who led the wealth management business at Merrill Lynch until early this year, took up his $850,000-a-year post at the Swiss bank on Tuesday and vowed to rebuild trust at its American unit.
He had been courted by UBS Chief Executive Oswald Gruebel since July and sued his former employer to enable him to join a rival. The US wealth division of UBS was hit by 5.8 billion Swiss francs ($5.8 billion) of client withdrawals in the second quarter of this year, as the bank fought a bruising tax case with US authorities, and analysts say it is still suffering.
That has prompted some to speculate that UBS might eventually want to sell the business - a proposition that McCann rejected. "I had to go to court against two of my former employers to be able...to work with UBS," McCann said. "I would have not done that if the whole goal was to sell the company."
McCann, said he would unveil his new strategy for the unit in the first quarter of 2010 but already expected to make selective cost cuts. His aim was to have a more nimble and more cost-efficient structure, he said. The 51-year-old executive said he would take a performance-related bonus that his base salary would be $850,000.
During a court hearing in his case against Bank of America , which bought Merrill Lynch, McCann said he had to give up a bonus that could have topped $5 million. Speaking from a hotel room in mid-town Manhattan just before he took up the new job, McCann told reporters he was "excited" at the prospect of joining the Swiss wealth management giant and that he got on very well with Gruebel from the start. "We immediately established a chemistry between the two of us," he told reporters.
The new US wealth chief will report to Gruebel and be a member of UBS' executive board. McCann said his predecessor, Marten Hoekstra, is leaving UBS. Analysts welcomed McCann's appointment, which had been widely expected. "We believe McCann has the managerial capacity needed to revise and restructure the US wealth management Americas business to become more profitable," said Vontobel analyst Teresa Nielsen, adding it would still be possible to spin off the unit. Shares in UBS rose at the open, but then lost ground and were down 0.2 percent at 1111 GMT, outperforming the DJS Banking index, which was down 0.7 percent.
McCann's task is not an easy one to fulfil as the Swiss bank is still in need of restructuring and faces competition from Bank of America, which topped UBS this year as the world's largest wealth manager by assets, and Morgan Stanley, which has bought nearly all the US wealth assets of Citi.
As well as the US tax row, which UBS settled in August, it has also been hit by executive departures, bad bets on auction rate securities and writedowns Second-quarter outflows at the US unit compared with the first-quarter's net new money inflows of 16.2 billion francs.
"The appointment of a new man at the top won't change the fact that the US wealth management unit remains strategically challenged," Helvea analyst Peter Thorne said. McCann held several executive positions in a 26-year career with Merrill Lynch.
His appointment should help the unit gain market share and increase profitability in a market worth more than $20 trillion, UBS said. UBS bolstered its presence in the United States in 2000 with the $10 billion acquisition of PaineWebber Group. The bank reviewed all its business units in 2008 and considered a sale of the former PaineWebber among various possible business options, but dropped the idea. McCann will lead nearly 8,000 financial advisors across the US, Puerto Rico and Canada, managing 695 billion Swiss francs ($692 billion) in invested assets.
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