New UBS CEO Ermotti Hoping for a Fresh Start

A day after his former employer, Italian bank Unicredit, unveiled a massive third-quarter loss on heavy writedowns in Eastern Europe, newly appointed UBS CEO Sergio Ermotti is hoping for a fresh start.

UBS headquarters in Zurich, Switzerland.
Steffen Schmidt

At Unicredit he held the position of head of markets and investment banking from 2005 to 2010, when he was snubbed for the top CEO job and left the Italian banking giant to join UBS in April of 2011 as CEO of the bank’s EMEA operations. In September he took over the reins from banking veteran Oswald Gruebel on an interim basis, when Gruebel stepped down after the $2.3 billion rogue trading scandal at the end of September.

But Ermotti, 51, who is the bank’s 4th CEO in as many years, has little time to dwell on the past.

Just a few hours after being announced permanent CEO, Ermotti was already boarding the plane to head to New York, where the bank will hold its annual investor day on Thursday.

At the investors day Ermotti is set to unveil the company’s much-anticipated new strategy as it is forced to adapt to a new market and regulatory environment, which has pressured the industry’s profits and led to a significant decline in revenues.

UBS has repeatedly said Ermotti will present the company’s plans to move towards a less risky, less complex and more focused investment bank.

The investment banking arm's main purpose will be to service the wealth management clients, which UBS redefines as its “core business”.

UBS has already announced it is cutting 3,500 jobs worldwide, with the brunt of the cuts to be borne by the investment bank. When speaking to CNBC earlier, outgoing chairman Kaspar Villiger said the bank will unlikely announce more job cuts.

Apart from the mammoth task of revamping the investment bank, Ermotti has another more subtle task high on his list: restoring client confidence after the bank swung from one disaster to the next.

Massive subprime losses were followed by a standoff with US authorities over tax evasion practices and a subsequent $780 million fine. Its wealth management unit battled with persistent outflows and when the bank finally turned the corner, both in terms of profitability and outflows, the $2.3 billion rogue trading loss shattered the bank yet again.

At a press and analyst conference on Thursday morning in Zurich, the softly spoken and charismatic Ermotti seemed slightly apprehensive in his new position, but skilfully juggled four languages and gained confidence as the questions progressed.

When asked what his tenure at Unicredit taught him, Ermotti chuckled and said the most important lesson was on “dealing with complexity” — a skill he will very much need to steer UBS through choppy waters.