His name has been circulating for a while since it became clear that the major Swiss bank UBS will take over its struggling rival Credit Suisse. It is now clear: Sergio Ermotti is returning to the top of UBS – to where he was from 2011 to 2020. “In the light of UBS’s new priorities,” the bank said on Wednesday morning, the board of directors had appointed Sergio Ermotti as the new CEO.
The Dutchman Ralph Hamers, who only took over the management of UBS from Ermotti in 2020, is making room for his predecessor again. He had actually swapped the banking world for the insurance world and became Chairman of the Board of Directors of Swiss Re in 2021. Ermotti will be confirmed as such on April 12, but then he will resign. Taking office at UBS is April 5th. Hamers is to remain on board as an advisor for a transitional period of a few months.
The Swiss media write of a “bang” – and in fact the personnel is quite significant. After the completion of the state-orchestrated takeover of Credit Suisse, UBS will be a bank of enormous size, especially for small Switzerland. Together, the balance sheet total of both institutions is twice as large as Switzerland’s gross domestic product. The new financial institution is likely to pose risks that the small country can hardly control. “A country held hostage by a bank” – this is how the emeritus compliance professor Monika Roth recently described the situation.
Shortly after the already historic Sunday, March 19, which marked the end of Credit Suisse, it still looked as if this bank, which is systemically important for Switzerland, would be managed by two foreigners: CEO Hamers and Chairman of the Board of Directors Colm Kelleher, who from Ireland comes from. This is not unusual for large Swiss companies, whether at Roche, Glencore or Nestlé: foreigners are on the executive floors everywhere. But at UBS, the top external duo threatened to become a burden. Too much government aid and guarantees were involved in the deal. The Swiss population is accordingly critical of the forced merger, as a survey by the Swiss broadcaster shows. In addition to the threat of job cuts, many now fear that the new bank will have a monopoly position and, above all, the constant danger that the Swiss state and thus the taxpayers will have to support the bank if problems arise again.
Bringing Sergio Ermotti back in this situation is obvious. Ermotti, 62 years old and a trained investment banker, is not only Swiss and is therefore familiar with the political and economic realities in the country. He is also the one who put UBS on the road to success after its humiliating state rescue in 2008: away from risky investment banking and focusing entirely on wealth management. Ermotti followed this course together with the former chairman of the board of directors and ex-Bundesbank boss Axel Weber. Together, the two were considered a dream team: Weber, the prudent crisis manager, and Ermotti, who also managed to tame the investment bankers thanks to his stable smell.
Something similar should now be asked of the Ticino. UBS is faced with the task of integrating Credit Suisse and adapting it in such a way that it fits the current profile and culture of UBS. As President Kelleher emphasized on Wednesday, the CS takeover is “the largest financial transaction since 2008”, which entails an enormous execution risk. Ermotti is the “better pilot”. Kelleher denied several times that the change was also about Ermotti’s pass.
Ermotti himself said he was honored to take on this “challenging and urgent task”. And he added: He had previously had the feeling that “the next chapter” in his career should be a major acquisition like this.
So it all sounds like UBS wants to stick around: it’s taking over CS as a whole. The top management of the bank obviously thinks little of the political demands to separate the Swiss unit in order to maintain competition. Ralph Hamers defended the bank’s position on Wednesday, saying that one is not number one in all areas of the Swiss market. The outgoing boss will probably not be able to tame the unrest in the country with this information. That will be Sergio Ermotti’s problem very soon.