It ought to have been a relaxed board meeting, with even a bit of nautical jollification thrown in. The dozen directors of UBS had decided to eschew their normal meeting places in Zurich and Basle and convened last week instead in the Spanish resort of Valencia.

It was the final few days of the America’s Cup. The Swiss bank was sponsoring Alinghi, the Swiss yacht that was defending the title against Emirates Team New Zealand – but as the 75ft black and red yacht, festooned with UBS logos, rose the Mediterranean waves, the UBS directors were confronted by their own tempest.

One meeting in Valencia had been earmarked specifically to decide on succession planning. The details remain sketchy, but Marcel Ospel, the chairman, quickly found himself alone against 11 dissenting directors in his argument that Peter Wuffli, the chief executive, should succeed him.

A few days later, the reputation of the Swiss for clinically executed handovers lay in tatters. Amid rampant speculation of a rift at the highest level, UBS was forced to rush out a statement at 1.22am yesterday. It was explosive. Not only was Mr Wuffli leaving with immediate effect, but also the board conceded that there had been a disagreement.

BACKGROUND

• Boardroom mutiny as a chairman is snubbed

• Wuffli goes as boardroom rift opens up at UBS

• UBS topples Goldman in half-time deals table

• Ospel nearly quits after protege not promoted

• Another top UBS banker quits

Silent UBS assassination augurs HSBC tie-up

On Thursday UBS announced another wrenching change, accompanied by another altogether improbable explanation

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• Ospel nearly quits after protege not promoted

• Wuffli goes as boardroom rift opens up at UBS

For months Mr Ospel, who had himself risen from chief executive to chairman, had been pushing the case for his protégé. It was not to be. “After careful evaluation, the board of directors decided not to accept his [Mr Ospel’s] proposal,” the statement said. “It does not view the succession of the CEO to the position of chairman as automatic.”

It seemed to be a public snub for Mr Ospel from some of the most senior business leaders in Europe. They included Helmut Panke, the former chairman of the management board of BMW and a Microsoft director, Sergio Marchionne, the Fiat boss, and Peter Voser, chief financial officer at Royal Dutch Shell.

Then, bizarrely, having dished out what amounted to a public rebuke to its own chairman, the board said that it had decided to ask him to stay on for another three years and he had agreed: “Marcel Ospel will continue his strategic leadership at UBS as chairman for at least another term.” It appeared all very confusing and un-Swiss. One of the most important roles of any board is to ensure that management succession is smooth and orderly and the decisions unanimous. It is doubly important in the secretive world of Swiss banking, where confidence is everything.

Shareholder hostility to the practice of elevating chief executives to chairmen is now well-established in Britain. The worry is that new chiefs may struggle to exercise their own authority or alter strategic course with the old boss peering over their shoulder.

Yet in Switzerland the practice has been commonplace. Perhaps the experience of Sir Peter Davis, who himself stepped down from the UBS board only a few weeks ago, had been instructive. His promotion from chief executive to chairman of J Sainsbury in 1993, in defiance of Higgs guidelines, came to be seen as disastrous for the supermarket group.

For UBS, the second-biggest bank in Europe after HSBC, it was a significant setback in a series of recent stumbles. Best-known in the City of London as the bank into which was subsumed the once-mighty house of SG Warburg, UBS has been starting to look unlucky, if not accident-prone.

The problem area has been the investment banking division, where several high-profile people have defected, notably Ken Moelis, who had orchestrated much of UBS’s push on Wall Street, and Jeffrey McDermott, the former co-head of investment banking. Some shareholders have also been concerned by the ratcheting up of costs in the United States.

Then in May came the embarrassing decision to close the in-house hedge fund Dillon Read Capital Management (DRCM) at a cost of $300 million. With much fanfare, DRCM had been created only 18 months earlier as a vehicle for John Costas, UBS’s former investment bank head, to work his supposed Midas touch. First, Mr Costas failed to click with potential investors, raising a comparatively scant $1.3 billion. And worse was to come when DRCM admitted to SwFr150 million (£61.2 million) of losses after being burnt in the US sub-prime mortgage market.

In Zurich, where the appearance of caution, prudence and above all confidentiality is so important, the very public DRCM misadventure was inevitably seen as a black mark for Mr Wuffli. The Wuffli years were by no means a financial disaster overall, however. UBS is producing steady profits growth, lifting attributable profits by 4 per cent to SwFr3.18 billion in the first quarter of this year. The world’s wealthy continue to flock to UBS, handing over another SwFr45 billion for it to manage for them just in the first three months of this year. UBS now manages SwFr3.1 trillion.

It also continues to scoop up mergers and acquisition mandates, advising ABN Amro on its proposed merger with Barclays and Alliance Boots on its sale to Kohlberg Kravis Roberts. It also advised BAE Systems on buying Armor Holdings last month.

On one level, the boardroom bust-up may not amount to much. UBS insists that the strategy is unchanged and that second-quarter profits will meet expectations. The bank remains a strong, well-entrenched banking powerhouse. Yet its credibility has, inevitably, been dented. “It would seem that there are cultural issues within the group to be addressed,” Standard & Poor’s said yesterday.

Mr Ospel said that the bank would keep investment banking and wealth and asset management under one roof. “The changes might look unsettling at first glance, but be assured we intend to act as one firm focusing on growth,” he said. “There is no disagreement on strategy.”

Capitalised at SwFr155 billion, UBS might seem to be an unlikely target for unwanted merger or break-up approaches, but if a suitor wanted a marriage, or a hedge fund wanted to agitate for change, now might be a propitious moment to make a move.

At the captain’s table

In the 2006 film Grounding, Marcel Ospel, chairman of UBS, was depicted as a cold-hearted buinsessman responsible for the collapse of Switzerland’s national airline. His personal differences with the UBS chief executive Luqman Arnold were said to behind the ousting of Mr Arnold in 2001. The 57-year-old started at the Swiss Bank Corporation in 1977 and by 1984 had worked in London and New York. He then moved to Merrill Lynch, before returning to SBC and becoming chief executive. Mr Ospel joined UBS as chief executive in 1998 and became chairman in 2001

Peter Wuffli is not a born investment banker. The former chief executive of UBS joined McKinsey & Co as a management consultant in 1984 and by 1990 had risen to the consultancy’s senior management in Switzerland. Mr Wuffli, 49, went on to a position at the Swiss Bank Corporation’s executive board, where he met Marcel Ospel. After the 1998 merger of SBC and UBS both men rose to top positions at the new group. Mr Wuffli does, however, have some historical banking credentials – his father, Heinz Wuffli, was general director of Credit Suisse from 1967 to 1977

Marcel Rohner, the new chief executive of UBS, has rapidly ascended the career ladder. After studying at the University of Zurich, he taught economics before joining the Swiss Bank Corporation’s investment banking business. Mr Rohner, 42, remained with SBC when it merged with UBS in 1998 and became chief risk officer in investment banking. In 2001, he was given command of private banking, a vital part of UBS, and a year later his empire was widened to include retail and business banking operations. He was widely seen as Peter Wuffli’s heir as chief executive

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