UBS AG Ratings Unaffected By Surprise CEO Dismissal

Standard & Poor’s Ratings Services said today that its ratings on UBS AG (AA+/Stable/A-1+) were unaffected by UBS’ decision to replace Peter Wuffli as CEO. UBS has stated that the decision was not due to strategic disagreements, and that second-quarter earnings will be broadly in line with market expectations. UBS has faced growing scrutiny in recent months due to the ill-fated Dillon Read Capital Management hedge-fund venture and cost increases in its investment bank, coupled with some high-profile departures. The strength, diversity, and quality of groupwide earnings remain supportive of the current ratings, however. Marcel Rohner, the new CEO, has performed well as head of UBS’ market-leading wealth-management business. Succession should therefore be relatively smooth, although it would seem that there are cultural issues within the group to be addressed. Standard & Poor’s does not expect any fundamental strategic changes, such as a breakup, but will closely monitor developments.