In a 16th century Swiss castle in March the boss of UBS challenged the head of its private bank to explain his plans for overhauling the business of managing the money of the rich.
Juerg Zeltner has been under the spotlight since last October, when chief executive Sergio Ermotti said UBS would partially withdraw from loss-making investment banking and focus more on the profitable wealth management arm.
Following scandals that tarnished the bank's reputation, Ermotti is trying to change the culture from one where division heads were left to their own devices if they delivered on targets, to one where their strategies are reviewed and tested by peers.
The 46-year-old Zeltner, whose four years in private banking make him one of the longest-serving executives in the 11-person top management team, is under scrutiny.
"He's increasingly being challenged and can no longer simply run his own fiefdom," a bank insider said.
Zeltner's division is expected to deliver the bulk of UBS's profit within three years and rehabilitate the lender.
This is a tall order when Switzerland's traditional model of bank secrecy is under attack from tax authorities in the United States and elsewhere, deterring wealthy depositors.
"The private bank has increasingly come into sharper focus for Sergio since the beginning of this year," said a high-ranking UBS manager, who declined to be named.
The idea that individuals should be challenged is at the heart of a management style more often associated with U.S. investment banks. Ermotti is a career investment banker who used to work at U.S. firm Merrill Lynch and has recruited heavily from U.S. banks.
"If the private bank is going to deliver 80 percent of future profits...then we want to better understand the mechanics of how it works," the manager said.
A UBS top executive said this has led to heated debates at senior management meetings and that Zeltner has locked horns with finance chief Tom Naratil, chief operating officer Ulrich Koerner, risk chief Philip Lofts and Ermotti himself. All declined comment.
One point of contention came when Zeltner resisted giving up some responsibility to other units -- mainly the corporate center -- as part of cost cuts last year, the UBS insider said.
Recent rivalries have involved an overlap with COO Koerner over his additional responsibility for Europe, which inevitably cuts into Zeltner's running of the private bank, according to one source familiar with both men. Both declined to comment.
Another top UBS manager, who declined to be named, insists the sparring represents nothing more than frank, intellectual debate among colleagues, although in a more forthright style than veterans in top management are used to.
"When you look at the amount of change we want from a team of very competitive people who want to win, it's a high-contact sport and you get a few bruises along the way. It's part of the game," this person said.
WEALTH OF NATIONS
UBS's shares leapt in October when the bank said it would axe 10,000 staff and scale back its riskier investment banking division, tarnished by a $2.3 billion rogue trading scandal and a $1.5 billion fine for rigging benchmark interest rates.
Activist shareholder Knight Vinke on Thursday called for UBS to completely hive off its investment bank, which it said posed a risk to the wealth management business.
As the world's second-largest private bank after Bank of America Corp. with some 951 billion Swiss francs in assets, private banking has always been UBS's bread and butter.
Some analysts doubt Zeltner can return its gross margin -- a measure of revenue from assets -- to pre-crisis levels but this week he gave his doubters food for thought.
UBS shares surged after the unit's gross margin inched towards the goal of 95 to 105 basis points although Ermotti cautioned that it was a "multi-year, not a multi-quarter" undertaking.
Zeltner has ramped up the private bank's advisory service to compensate for the fall in deposits from investors twitchy about the risk of being targeted in their own government's crackdowns on secret offshore bank accounts. That investment is expected to hit revenues in coming quarters.
But if he wants to make bigger profits analysts say he must still find a way to attract new clients and draw existing ones out of low-margin cash and cash products where they have been sheltering from the euro crisis.
(Additional reporting by Oliver Hirt; editing by Anna Willard)