The number one bank in Switzerland UBS has called on a seasoned pilot, its former boss Sergio Ermotti, to deal with the massive risks posed by the gigantic and controversial merger with its rival Credit Suisse.
62-year-old Sergio Ermotti knows the country’s first bank well, which he already managed from 2011 to 2020 and above all restored after the near collapse of the establishment during the 2008 financial crisis and the transactions of a rogue trader. When he left in 2020, this Swiss banker had left the Dutchman Ralph Hamers, the former boss of ING bank, 56, the keys to a healthy bank to launch a new phase of growth focused on digital technologies.
But seeing itself forced to buy the number two in the sector by authorities who feared the bankruptcy of the banking giant and the reputation of the financial center, UBS’s priorities have changed, insisted Colm Kelleher, the president of UBS during of a press briefing in Zurich. “Our number one priority is to stabilize the situation,” Kelleher said, acknowledging that “investors and shareholders are very concerned” about the “implementation risks” of this transaction.
This merger is not only “the biggest transaction” since the 2008 financial crisis, it is also “the first time” that two globally systemically important banks will merge, which brings “risks of meaningful implementations,” he warned. “The opinion of the board of directors is that for this massive integration exercise, Sergio will be a better driver,” explained Mr. Kelleher.
Mr. Ermotti had taken over the bank in 2011 while UBS was also suffering its share of shocks at the time after its bailout by the state. The bank then regularly made headlines in the press, with Mr. Ermotti repeating at the time that he wanted to make the bank “boring” again. The sign that the scandals of the past were behind her.
A “well-known” boss
During his nine years at the helm, he had made cuts in investment banking, initiating “a profound change in culture” which had made it possible to “regain the confidence of customers and other stakeholders”, underlines UBS.
He will take office on April 5 after the general meeting of UBS. Mr. Hamers will give him the place “in the interest of the new combined entity of the Swiss financial sector and the country”, specifies the bank, but will remain at his side during a transition period to “ensure the success of the transaction”.
On March 19, UBS agreed to buy Credit Suisse, the country’s second largest bank, for 3 billion Swiss francs (nearly 3 billion euros), a pittance for a bank the size of Credit Suisse. But this merger will give birth to a gigantic bank and raises questions about competition, its weight in economic life in Switzerland and the preservation of thousands of jobs, arousing strong criticism in Swiss economic and political circles. “Being Swiss helps, at the margin,” acknowledged Mr. Kelleher, who nevertheless recalls that the majority of UBS’s activities are international.
But the choice of Mr. Ermotti “is in no way inspired or intended to cover political risks”, he warned, the objective being to carry out a complex merger. “Sergio Ermotti is well known and has, in our view, a solid and adequate history for the difficult task ahead of restructuring and integrating Credit Suisse,” reacted Flora Bocahut, analyst at Jefferies, in a market note. Mr. Ermotti is “the right person for this difficult task”, added Andreas Venditti, analyst at Vontobel, in a stock market commentary.
Mr. Ermotti knows the workings of finance in Switzerland well. After leading UBS, he took over the presidency of the reinsurer Swiss Re, from which he will resign in view of “these exceptional circumstances”, he said. But he also spent part of his career with the American bank Merrill Lynch and the Italian bank UniCredit. “We will have to work very hard to avoid consequences for taxpayers,” he wanted to reassure during the press conference marking his return.
Source: AFP
The number one bank in Switzerland UBS has called on a seasoned pilot, its former boss Sergio Ermotti, to face the massive risks posed by the gigantic and controversial merger with its rival Credit Suisse. Aged 62, Sergio Ermotti knows indeed the first bank in the country, which he already led from 2011 to 2020 and above all recovered after the…