(Zurich) Switzerland’s number one bank UBS has brought in a seasoned pilot, its former boss Sergio Ermotti, to tackle the massive risks posed by the gigantic and controversial merger with rival Credit Suisse.
Aged 62, Sergio Ermotti knows the country’s first bank well, which he already managed from 2011 to 2020 and above all recovered after the near collapse of the establishment during the 2008 financial crisis and the transactions of a rogue broker.
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,” said Kelleher, acknowledging that “investors and shareholders are very concerned” about the “implementation risks” of this transaction.
This merger is not only “ the largest transaction ” since the 2008 financial crisis, it is also “ the first time ” that two globally systemically important banks will merge, which brings “ risks of significant implementation”, he warned.
“The view of the board is that for this massive onboarding exercise, Sergio will be a better driver,” Mr. Kelleher explained.
Mr. Ermotti took over the bank in 2011 when 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.
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 UBS general meeting. Mr. Hamers will hand over to him “ in the interest of the new combined entity, 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 ”, admitted 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 track record 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 commentary.
As of 7:13 a.m. EST, UBS shares rose 1.72% to 18,045 Swiss francs, supporting the SMI, the Swiss Stock Exchange’s benchmark index, up 0.79. %.
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 declared.
But he also spent part of his career at the American bank Merrill Lynch and at 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.