Sergio Ermotti returns as UBS CEO to oversee Credit Suisse takeover
- Sergio Ermotti will replace current CEO Ralph Hamers, who is set to remain at UBS to advise the bank during the transition period to ensure a smooth hand-over, UBS said in a statement Wednesday.
- The move will be effective April 5, UBS said in a statement.
- Ermotti was group CEO at UBS for nine years, from November 2011 to October 2020, and is currently chairman of insurance company Swiss Re.
The move will be effective April 5, UBS said in a statement.
Shares of UBS were up 2% at the open.
Ermotti — who was group CEO at UBS for nine years from November 2011 to October 2020 — will replace the current CEO Ralph Hamers. Ermotti is currently the chairman of insurance company Swiss Re.
Hamers will remain at UBS to advise the bank during the transition period to "ensure a successful closure of the transaction and a smooth hand-over," the company said.
In a deal orchestrated by Swiss regulators, Switzerland's largest bank UBS agreed on March 19 to buy its embattled rival Credit Suisse for 3 billion Swiss francs ($3.2 billion). The move came as governments looked to stem a contagion threatening the global banking system.
The leadership change comes "in light of the new challenges and priorities facing UBS after the announcement of the acquisition," UBS said Wednesday.
The statement pointed to how Ermotti "successfully repositioned" the bank following the 2008 global financial crisis, and "achieved a profound culture change within the bank." That allowed the Swiss lender to "regain the trust of clients and other stakeholders, while restoring people's pride in working for UBS," the bank said.
Hamers told employees of the government-orchestrated takeover that UBS "did not buy Credit Suisse only to close it," Reuters reported.
In the announcement, UBS Chairman Colm Kelleher called Hamers an "outstanding" CEO who led UBS to "unprecedented success despite a challenging environment."
While the acquisition of Credit Suisse supports UBS' existing strategy, it imposes new priorities on the group, he said.
"With his unique experience, I am very confident that Sergio will deliver the successful integration that is so essential for both banks' clients, employees and investors, and for Switzerland," Kelleher said.
The move surprised some market observers, but one analyst said it was just part of the fallout from the merger deal.
As with "all forced mergers or an acquisition of not equal parties, you can always have this friction and I think that's what you see at play here," Peter Garnry, head of equity strategy at Saxo Bank, told CNBC on Wednesday.
"It was very clear that the now former CEO at UBS was not really happy about this shotgun wedding and I think that's the fallout you see now."
Notably, in an interview with Swiss newspaper NZZ am Sonntag in September, Ermotti argued that there was no "compelling" economic reason for Switzerland to have two big banks.
"Everything we have seen, I think, since the global financial crisis with regulation is leading us down one path, of bigger and bigger and banks, more and more concentration, which leads to fragility but also less competition and I'm not sure it's long term going to be good for the overall financial system," Garnry argued.
"It puts the conversation out there: are we moving towards more public interference with money itself?"
He said the discussions in the U.S. after the collapse of Silicon Valley Bank is, "to what degree should there be guarantees on deposits above the FDIC deposit guarantee limit? If you do that, what is the purpose of having banks, private money etc?"
"I think there are big questions here about this and where we're heading in the banking system," Garnry said.
In a press briefing following the announcement, Kelleher stressed that Ermotti's Swiss nationality is a "nice thing," but not a main driver behind the appointment decision. He stressed the "significant execution risk" of implementing UBS' takeover of Credit Suisse, noting the new CEO's expertise best equips him as the "best pilot" to navigate the challenge.
He signaled the Swiss government were advised of Ermotti's designation.
"Clearly regulators have a right of saying no. So we have to make sure that there is approval and Sergio is approved for this role," he said.
Ermotti expressed interest to remain in the position long term, saying that the tasks ahead align with his vision for UBS.
"There is a sense in me, and I felt, a sense of call of duty aspect. And also, frankly speaking, I always thought that despite all these discussions around the size of the bank, I always felt that the next chapter I wanted to write back then was a chapter of doing a transaction like this one," he said.
Hamers noted that he has stepped aside in the interest of the new combined bank, of its stakeholders and of the broader Swiss nation. He said that the bank wants to "take away uncertainty as soon as we can" regarding its restructuring and prospective layoff plans.
He downplayed the potential risks posed by the combined bank's scale:
"I always say the big debate nowadays is not too big to fail, it's too small to survive."
Kelleher echoed the view, observing that UBS has a capital-light balance sheet and that the group's strategy is to downsize the non-core units of Credit Suisse as quickly as possible. Critically, he flagged the importance of matching the perspectives of the two banks:
"There are cultural issues between Credit Suisse and UBS. We do not want to import a bad culture into UBS," he said, noting that the core of this cultural conflict was in the investment bank branch of reputationally-challenged Credit Suisse.
— CNBC's Lim Hui Jie contributed to this report.
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