Carsten Kengeter is charged with cleaning up UBS -- again.
The 44-year-old CEO of UBS' investment bank, Kengeter is tasked with paring the unit down to concentrate solely on the bank's clients' -- rather than its proprietary -- needs. The assignment follows news last month of a $2.3 billion loss caused by London rogue trader Kweku Adoboli -- a scandal that forced chief executive Oswald Grübel to resign.
Grübel was replaced in the interim by UBS European head Sergio Emotti, leaving the German-born Kengeter to restructure the investment bank largely on his own. But Kengeter has done his best work at UBS following a crisis.
Indeed, UBS hired Kengeter in 2008 to co-head global fixed income, currencies and commodities, or FICC, in London after reporting a Sfr21.3 billion ($23.1 billion) loss -- the largest in Swiss history -- due to subprime-related write-downs. He and his New York- and Stamford, Conn.-based co-head, Jeffrey Mayer, quickly shuttered UBS' real estate and securitization business and discontinued its structured products activities. Those moves, coupled with 6,000 layoffs and a Sfr60 billion Swiss government bailout, helped UBS narrow its loss to Sfr2.7 billion in 2009 and reach a Sfr7.5 billion profit in 2010.
Kengeter was handsomely rewarded for those results, earning Sfr13.2 million in 2009 and Sfr9.3 million in 2010, surpassing even Grübel. At the same time, UBS lost more than 50 senior-level bankers due in part to compensation complaints. But Kengeter showed no sympathy for the defectors, reportedly telling bankers on a conference call that they are "spoiled children and were the ones who messed this place up."
He was named co-chief executive of the investment bank, with Alex Wilmot-Sitwell, in 2009. The following year, Kengeter became the unit's sole CEO when Sitwell became head of Asia-Pacific and was often mentioned as a possible successor to Grübel.
Kengeter began his career in 1992 at Barclays de Zoete Wedd after receiving a master's degree from the London School of Economics. He set up a credit derivatives trading desk for Barclays, then moved to Goldman, Sachs & Co. in 1997 to work in derivatives marketing out of Frankfurt. Within three years, he was named head of the European and Asian collateralized debt obligation business and moved back to London.
In 2002 Kengeter took charge of Goldman's German region FICC, returning to Frankfurt, and a year later assumed the role of co-head of European FICC and structured equities, which brought him back to London. His last job at Goldman before joining UBS was co-head of its Asian (excluding Japan) securities division, based in Hong Kong.
Kengeter has recently taken some heat for UBS' trading losses because Adoboli was operating under his nose in London. Some media reports have said that the scandal has narrowed his chances of becoming UBS' next CEO. But Kengeter may be better off leaving that lower-paying position to someone else anyway.