The changes were wrapped in pleasant words: «We are strengthening our team for future growth,» read the title of the internal message in which UBS CEO Sergio Ermotti announced the changes to the top management on Thursday. In reality, the restructuring is akin to an earthquake.

Iqbal Khan, the crown prince for Ermotti’s succession and previously the sole executive responsible for the Global Wealth Management (GWM) business at the corporate level, will have to share his domain in the future: Rob Karofsky will be positioned alongside him. Khan will move to Asia and focus on the market there, while Karofsky will drive the business in the Americas.

Clear Strengthening of the Two Most Important Growth Markets

This makes sense from a business perspective: UBS has consistently emphasized that it wants to focus on the wealth management business and considers Asia and the Americas as its most important growth markets.

Ignited Fantasies

In these two markets, UBS aims to generate the revenues it needs to serve and satisfy its shareholders in the future. Their expectations are high: the acquisition of Credit Suisse has fueled their imaginations, speculating on a share price of up to 50 Swiss francs; currently, the shares are trading at around 27 francs.

And there is still the dispute with the Federal Council over capital requirements. If the federal government pushes through its aggressive course, it will be costly for UBS, as the new Swiss giant bank may have to raise an additional 25 billion francs.

Restructuring Fuels Speculation

From a personnel policy perspective, the restructuring of the top management invites some speculation. Notably, Khan will share leadership with investment banker, Karofsky, as a co-leader. Concurrently, Khan will relocate to Asia.

This can also be seen as a punitive transfer. In other words, the UBS management does not trust Khan to be able to drive forward the crucial wealth management business for the future of the big bank on his own.

Removed from the Field

However, there is another way of looking at it: with Khan and Karofsky, the UBS leadership is prioritizing two people for the succession of CEO Sergio Ermotti. They now have the opportunity to prove themselves outside in the business.

Were there not also Beatriz Martin Jimenez, head of Non-Core & Legacy, Switzerland head Sabine Keller-Busse, and Aleksandar Ivanovic, head of Asset Management? These three are still in the close circle of potential successors. But with Khan and Karofsky, they have separated themselves from the field

The race is by no means decided yet, but they are enjoying the head start.

Benjamin Cavalli Could Be Worth his Weight in Gold for Khan

For Khan, the restructuring does not make things easier, but not necessarily worse. With Benjamin Cavalli at his side, he has someone who could prove extremely valuable for his career: Cavalli, Head of Strategic Clients, knows the Asian market like no other. For almost 30 years, he has alternated between working for UBS and Credit Suisse in this growth region. He could become a kingmaker.