Arnold opposes UBS's choice of lawyer Kurer as new chairman

UBS SHOULD appoint Sergio Marchionne as its interim chairman, pending the search for a more appropriate successor to Marcel Ospel, the former executive leading an activist campaign against the Swiss bank suggested yesterday.

Luqman Arnold, whose Olivant investment company this week revealed it had taken a 0.7 per cent stake, dismissed the board's succession plans and called on directors to "be honest and do a proper search for a chairman".

UBS's board this week nominated Peter Kurer, the bank's general counsel, as the new chairman for election by shareholders at the bank's annual meeting on April 23nd.

Mr Arnold's intervention comes after UBS this week claimed it had begun a "new chapter" in its history when it unveiled a further $19 billion of losses on securities linked to the US subprime mortgage crisis, and proposed an emergency rights issue to raise 15 billion Swiss francs. It suffered about $18 billion in writedowns last year.

As a result of the losses, Marcel Ospel, UBS's long-serving chairman and the architect of its strategy, announced he was stepping down to be replaced by Peter Kurer, a lawyer who was previously UBS's general counsel.

But Mr Arnold, who has proposed significant changes in the bank's corporate governance and structure following its massive losses in the US subprime turmoil, said he believed more suitable candidates were available. No one had come forward this year when the board had initially sought a lieutenant for Mr Ospel because the job was so unattractive.

"You'd spend one year as deputy to Marcel Ospel and then you'd probably get fired," he said.

Mr Arnold, who left UBS in 2001 after a bitter clash with Mr Ospel, said the ideal candidate would combine strategic vision with knowledge of handling risk, experience of running a public company and demonstrable independence. Given the size and flagship role of UBS for Switzerland, the candidate would probably have to be Swiss.

He said he believed that there was a handful of bankers who filled all the criteria, and many more who might meet the 80 per cent level that he deemed sufficient.

Mr Arnold, who recently failed in a bid to acquire UK mortgage lender Northern Rock, declined to mention names - apart from stressing he did not see himself as a candidate. Bankers have speculated about Josef Ackermann, chief executive of Deutsche Bank and a Swiss citizen, and Markus Granziol, a former top UBS banker and also Swiss.

UBS's board of directors is expected to discuss Mr Arnold's six-page letter before issuing a formal response.

Mr Arnold said he believed Mr Marchionne, UBS's lead independent director, to whom his letter had been sent, would agree to meet soon to discuss the points raised.