SWITZERLAND: Sergio Ermotti has been rehired by UBS Group AG (UBSG.S) as CEO to oversee its large acquisition of neighbouring Credit Suisse (CSGN.S). This unexpected decision was made to capitalise on the Swiss banker’s experience reviving the bank during the global financial crisis.
The difficult task facing the former trader turned corporate problem solver is convincing the world’s wealthiest that UBS will continue to be a safe haven for their money while also letting thousands of employees go and scaling back Credit Suisse’s investment bank.
The greatest deal in finance since the global financial catastrophe more than ten years ago needed to be handled by Ermotti, who was summoned back. He emphasised that his attention was on the significant risks of making the merger work for UBS and attempted to downplay any effect that Ermotti’s nationality may have played in securing the job.
Ermotti, who served as the company’s CEO from 2011 to 2020 and is currently its chairman (SRENH.S), will take over as of April 5. He pleaded for “a little bit of patience” for “a couple of months” so that the bank could develop its strategic plan. He cautioned journalists against making terrible conclusions in a hurry.
The 62-year-old returned to UBS out of a desire to be part of a major deal. He assumed leadership when UBS acquired its rival in Switzerland in a shotgun merger arranged by Swiss authorities to quell unrest after Credit Suisse ran aground.
A hazardous venture that increased the Swiss economy’s dependence on a single institution, that deal made UBS Switzerland’s sole international bank, supported by around 260 billion Swiss francs ($170 billion) in state loans and guarantees. Shares of UBS increased 1.8% on Wednesday.
Hamers relinquish his rein
Experts claimed that Ermotti is well qualified for the position due to his previous experience cutting back UBS’s investment bank following the 2008 financial crisis. Ermotti’s return reduces integration and execution risk by 80%. Sergio has cut risk and made the investment bank serve clients, making him a stakeholder and bondholder.
Prior to this, Ermotti had called the work of integrating UBS and Credit Suisse “urgent and demanding.” It was announced by UBS that departing CEO Ralph Hamers, who had succeeded Ermotti in November 2020, “has agreed to stand down to serve the interests of the new combination… and the country.” Hamers was tasked with merging two banks with $1.6 trillion in assets, 120,000 employees, and a complicated balance sheet.
When UBS announced its acquisition of Credit Suisse on March 19, he was conspicuously missing. The closing of Credit Suisse was a “sad day” that nobody desired, according to Hamers the following day, who appeared sleep deprived.
Hamers, a nearly 30-year ING employee who was unexpectedly chosen to lead UBS due to his lack of investment banking or wealth management experience, has worked for ING in the Netherlands for nearly 30 years.
Also Read: UBS Agrees to Buy Credit Suisse for $3.25 Billion