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Leadership
The Ermotti succession: How UBS can transform a leadership transition into strategic advantage
CEO successions rarely fail because of poor selection – they fail in execution. As Sergio Ermotti prepares to step down, UBS has the opportunity to turn leadership transition from a risk-management exercise into a catalyst for strategic renewal.
Rapid read:
- The UBS CEO succession is not a replacement exercise but a strategic inflection point. The next leader must be chosen for their capabilities to win the next decade, not for replicating Sergio Ermotti’s crisis-management strengths.
- The board should assess candidates against future-ready leadership capabilities. Ambidexterity, developmental agility, breadth of experience, influence, and a clear leadership brand matter more than past roles or current regulatory pressures.
- Execution, not selection, determines success. Deliberate transition acceleration before and after the handover is essential to protect leadership investment and avoid the high failure rates that plague executive transitions.
Reports that Sergio Ermotti plans to step down as UBS chief executive in April 2027 may mark the beginning of one of the most consequential succession processes in global banking.
With approximately 15 months until the anticipated transition, UBS finds itself in an enviable position: adequate runway, multiple internal candidates, and a chair in Colm Kelleher who has publicly committed to executing what he calls a “bloodless coup,” a smooth, internally driven handover modeled on Morgan Stanley’s successful 2023 transition.
Yet the very factors that make this succession manageable also create risk. A comfortable timeline can breed a false sense of security. Multiple candidates can generate destructive internal competition. And the temptation to simply “replace Ermotti” with someone who mirrors his capabilities may blind the board to what UBS needs for the decade ahead.
The difference between a succession that merely fills a vacancy and one that creates lasting competitive advantage lies in how UBS approaches this new chapter.
With the right approach, UBS could turn this transition into a clear win for the organization and steer clear of the challenges that derail many executive transitions.
Beyond replacement: the strategic opportunity
Traditional succession planning asks a straightforward question: who can fill this role when the incumbent leaves? It is fundamentally defensive, focused on continuity, risk mitigation, and maintaining the status quo. For a bank navigating regulatory headwinds and integration complexity, this instinct would be understandable.
But UBS has an opportunity to ask a more ambitious question: what capabilities will we need to win in 2030 and beyond, and how do we use this transition to build them?
This reframe matters because the challenges facing UBS’s next chief executive will differ materially from those Ermotti has navigated. The Credit Suisse integration, while not complete, has passed its most acute phase. The regulatory battle over capital requirements will likely be resolved, one way or another, before or shortly after the transition. What remains is a different mandate: not crisis management, but strategic transformation.
The incoming leader will need to articulate a compelling vision for a combined UBS that justifies its scale to skeptical regulators, energizes a workforce still processing cultural integration, and identifies new sources of growth in an industry facing structural margin pressure. This is not a job for a caretaker. It demands what my IMD colleague Ric Roi calls ambidextrous leadership: the capacity to simultaneously optimize today’s business while exploring tomorrow’s opportunities.
“The best leaders demonstrate situational judgment, knowing when to drive efficiency and tolerate, even encourage, productive inefficiency in the service of innovation.”
Evaluating candidates for dual transformation
Reports suggest four internal candidates have emerged: Aleksandar Ivanovic from asset management, wealth management co-heads Iqbal Khan and Robert Karofsky, and chief operating officer Bea Martin. Each brings distinct strengths. But the board’s evaluation framework matters as much as the candidates themselves.
The temptation will be to assess candidates against Ermotti’s profile or against the demands of the current moment. Both approaches carry risk. Ermotti’s second tenure has been defined by integration execution, a specific challenge requiring specific capabilities. The next chief executive will inherit a different mandate altogether.
Instead, UBS should evaluate candidates across five forward-looking dimensions that predict success in complex, evolving environments.
First, what we have termed ambidexterity. Can the candidate pursue the twin imperatives of optimization and transformation simultaneously?
The best leaders demonstrate situational judgment, knowing when to drive efficiency and tolerate, even encourage, productive inefficiency in the service of innovation. The board should seek evidence of candidates consciously switching between modes in response to changing conditions.
Second, developmental agility. How quickly does this leader learn from new experiences?
In my research on leadership transitions, I have come to view developmental agility as the meta-quality that determines how quickly leaders develop all other capabilities. It combines growth mindset (the belief that abilities expand through effort) with learning agility (the skill of extracting meaningful lessons from experience and applying them in new contexts). Past performance matters, but learning velocity matters more. The board should examine how candidates have responded to unfamiliar situations, setbacks, and role transitions.
Third, breadth of experience. Our research at IMD consistently shows that the most effective senior leaders have typically held six to nine diverse roles spanning functions, geographies, and business contexts before reaching the top job. This breadth creates the pattern recognition that enables leaders to navigate complexity.
Fourth, followership and influence. Effective succession candidates will have built alliances beyond their immediate reporting lines. They will have demonstrated the ability to mobilize people around a vision, create engagement across organizational boundaries, and earn trust from diverse stakeholders.
Fifth, a clear leadership brand. The strongest candidates will have developed a reputation that precedes them, a coherent identity that signals what they stand for and how they lead. This brand emerges from consistent behavior over time and reflects both substance and self-awareness.
These developmental investments serve a dual purpose.
The selection process as development opportunity
With 15 months until the anticipated transition, UBS has time to do more than evaluate. It can actively develop its candidates through structured experiences designed to surface and strengthen the capabilities that matter.
Consider assigning each candidate a strategic initiative that requires both optimization and transformation: a 90-day sprint demanding measurable efficiency improvements alongside a pilot of something genuinely new. Such projects create observable evidence of ambidextrous capability while delivering real business value. Similarly, the board might rotate candidates through final “polishing” experiences that broaden their exposure to parts of the business they know less well. Khan’s move to Hong Kong as Head of Asia-Pacific and Karofsky’s appointment as head of the Americas already reflect this logic. Martin’s experience running the non-core unit, an entirely different challenge from her prior operating role, has similarly built range. Ivanovic, as the most recent addition to the executive board, may benefit from structured exposure to the wealth management and investment banking operations that sit outside his asset management domain.
These developmental investments serve a dual purpose. They build capability in candidates who may ultimately be selected. But they also provide the board with richer, more diagnostic information than interviews and track records alone can offer. Seeing how candidates perform in unfamiliar contexts reveals developmental agility in ways that examining past successes cannot.
The first 90 days after transition are equally critical.
Managing the transition window
Even the strongest succession process can fail in the transition itself. My research over two decades points to a consistent pattern: The causes are often not selection errors but integration failure. New leaders struggle to build relationships, read organizational context, or establish credibility before making consequential decisions.
This is why I advocate for deliberate transition acceleration, a structured approach to the highest-risk phases of any leadership change.
UBS should begin transition planning well before the selection is finalized. From approximately 90 days before the handover, the incoming leader should engage in structured stakeholder mapping, shadow Ermotti in key settings, and develop a communication strategy for the transition. Detailed handoff planning should document not just responsibilities but the tacit knowledge that Ermotti has accumulated: the relationships, the institutional memory, the unwritten rules that shape how decisions actually get made.
The first 90 days after transition are equally critical. Intensive coaching can help the new leader navigate unfamiliar pressures. Structured listening tours create opportunities to gather perspectives from across the organization, information that enables better early decisions and signals respect for institutional knowledge. Identifying and executing a small number of high-impact, low-complexity quick wins builds early credibility and momentum without over-committing to untested directions. From 90 to 180 days, the focus shifts to stabilization: establishing performance rhythms, course-correcting based on early feedback, and deepening the board relationship. New leaders who charge ahead without consolidating their position often find themselves isolated when they encounter their first serious setback.
The Ermotti question
One additional consideration warrants attention. Reports suggest Sergio Ermotti could potentially return as chair in the future if he wanted the role. This possibility creates governance complexity that the board should address proactively.
A former chief executive serving as chair can provide invaluable continuity and institutional knowledge. But it can also constrain the new leader’s autonomy, particularly if the chair’s preferences are known to differ from the incoming chief executive’s direction. The board should be intentional about defining the chair’s role and ensuring that whoever succeeds Ermotti has genuine authority to lead.
Transition acceleration protects what may be a decade or more of developmental investment during the moment when successors are most vulnerable.
From insurance to advantage
The Ermotti succession arrives at a pivotal moment for UBS. The bank has navigated the acute phase of its Credit Suisse integration. It faces regulatory challenges that, while significant, are unlikely to prove existential. What it needs now is leadership that can define and execute a vision for the next decade.
Approached defensively, this succession becomes an exercise in replacement: finding someone who can do what Ermotti did. Approached strategically, it becomes something far more valuable: an opportunity to build adaptive leadership capability that creates competitive advantage today while positioning UBS for challenges and opportunities that cannot yet be fully anticipated.
Transition acceleration protects what may be a decade or more of developmental investment during the moment when successors are most vulnerable. Think of it this way: you would not build a Formula 1 car and then send it into a race without a pit crew. The transition window is where the pit crew earns its keep.
The next 15 months will reveal which approach UBS chooses.
Michael Watkins is Professor of Leadership and Organizational Change at IMD Business School and author of The First 90 Days: Proven Strategies for Getting Up to Speed Faster and Smarter.
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