Bloomberg- There’s still some mystery about Peter Wuffli’s removal as chief executive officer of UBS AG. To listen to the company, there was some mild disagreement about how to rearrange the chairsin the boardroom. More plausibly, it was the $300 million the bank will have to pay to close down its U.S. hedge-fund unit.
There is a lesson in that for other big banks. For the past year, they have been setting up their own hedge funds, or buying stakes in existing operators, convinced they have to be in that business, or get left behind.
It is unlikely Wuffli will be the last banking CEO pushed out by problems in a hedge-fund unit. In reality, those businesses mix about as well as oil and water. Banks would be better off staying out of that area completely.
Until this year, Wuffli’s record was pretty good. He had pulled UBS through the bear market with less damage than most of its competitors, and helped turn the wealth-management division into a world-beating business.
True, there were defections of senior bankers, and earnings this year were disappointing. Yet neither looked like hanging offenses. Investment bankers, like footballers, are constantly jumping from one team to another. Earnings are always volatile.
