UBS’s ailing investment bank is taking a bold step by hiring Andrea Orcel, one of the most controversial bankers of the financial crisis, as co-CEO alongside Carsten Kengeter. Orcel, who was until recently chairman of global banking and markets at Bank of America Merrill Lynch, is renowned for drumming up copious amounts of advisory business, so he should be exactly what UBS needs as it shifts its focus to lower-risk work and away from its struggling fixed-income and trading businesses. But the London-based Italian isn’t exactly risk-free — his love of large bonuses and gung ho deal making are well known throughout Europe.
In 2007, Orcel headed the Merrill team that advised Banco Santander, Fortis and Royal Bank of Scotland on the ultimately disastrous $100 billion acquisition of Dutch bank ABN Amro. His subsequent bonus package of $38 million for the year led former Fed chairman Paul Volcker to comment in 2009 that there was “something wrong with the system.” Orcel’s Merrill colleagues say privately that he was a consistent generator of revenues whom the investment bank will miss after losing money in the fourth quarter of 2011. Merrill offered Orcel the position of president of its European business in succession to the retiring Jonathan Moulds. But, colleagues say, he is “high maintenance” and a freewheeling deal maker who is “not a team player.” The internal memo announcing Orcel’s departure from Merrill contained a curt one line about him and a whole paragraph paying tribute to Moulds.
Orcel, 48, will be working with a friend and former colleague, Sergio Ermotti, the Swiss-born CEO of the UBS group. Otherwise the job’s attractions for him are not obvious. “It’s a coup for UBS; he’s a proven rainmaker who should bring in clients. But what’s not clear is what’s in it for him. UBS is shrinking, so he’ll have less to offer his clients,” says Christopher Wheeler, an analyst at Mediobanca in London. Bankers who know Orcel say he may have been lured by the prospect of succeeding Ermotti, whom they think he outshone during their days at Merrill. That would be a coup for a banker who’s seen as more of a deal maker than a manager.
