UBS is bringing back its former chief executive Sergio Ermotti to tackle the extremely complex and risky task of closing the bank emergency takeover of the competitor Credit Suisse
The surprise The appointment, announced on Wednesday, underscores the scale of the challenge the Swiss lender faces in completing a unique transaction merger of two world banks with a combined net worth of nearly $1.7 trillion.
The Swiss government staged the bailout 10 days ago when Credit Suisse was on the brink of collapse, a failure that would have rocked a global financial system already reeling from America’s second largest bank collapse in the history.
Ermotti was UBS
(UBS) CEO between 2011 and 2020 and is credited with successfully turning the bank around following its bailout during the 2008 financial crisis. He is considered a safe pair of hands capable of integrating Credit Suisse and salvaging key areas of its business.
His second term at the helm, beginning April 5, marks the end of current CEO Ralph Hamers’ tenure after just two and a half years in the role during which the bank has delivered successive record results.
Hamers “has agreed to step down to serve the interests of the new merger, the Swiss financial sector and the country,” UBS said in a opinion. Hamers will remain with the lender for a transitional period.
UBS Chairman Colm Kelleher thanked Hamers for his input but said the board felt Ermotti was “the better horse” for such a massive integration. “The integration of these companies carries an enormous risk,” said Kelleher at a press conference.
First, Ermotti needs to shed thousands of jobs, downsizing Credit Suisse’s investment bank while aligning it with a more conservative risk culture — a task he’s familiar with.
During his earlier tenure as CEO, Ermotti “transformed” the investment bank from UBS, “reducing its footprint and effecting a profound cultural shift within the bank that enabled it to regain the trust of clients and other stakeholders, while at the same time inspiring people’s pride, to work for UBS,” the lender said in its statement.
Kelleher and Hamers both highlighted the cultural differences to Credit Suisse. UBS’s smaller rival has been plagued by scandals and compliance breaches in recent years, wiping out its profits and losing several top executives.
A US Senate investigation has dealt a new blow to Credit Suisse’s reputation published The bank was found Wednesday to be complicit in ongoing tax evasion by ultra-rich Americans.
“We don’t want to import bad culture into UBS,” Kelleher told reporters, adding that UBS would put all Credit Suisse employees “through a culture filter to make sure we didn’t import anything into our ecosystem that would cause cultural problems.” ”
Hamers said integrating the banks is something he “would have liked to have done” but that he supports that of the board Decision that was in the best interests of the new company and its stakeholders – including Switzerland and its financial sector.
The merger is also highly topical for the Swiss economy. The combined bank’s assets are worth twice the country’s annual output, while local deposits in the new entity account for 45% of GDP — an enormous sum even for a nation with healthy public finances and low debt.
In Wednesday’s statement, Kelleher said the deal “imposes new priorities on us” while supporting UBS’s existing strategy.
He added: “With his unique experience, I am very confident that Sergio [Ermotti] will enable the successful integration that is so important for customers, employees and investors of both banks and for Switzerland.”
Ermotti told reporters he felt “called” to take on the role and that during his previous tenure as CEO he had believed that an acquisition of this nature was the “right next step for UBS”.
“I always felt like the next chapter I wanted to write back then was a chapter about a transaction like this.”
Ermotti is currently Chairman of Swiss Re
(SSREF) and intends to step down after the insurer’s annual general meeting next month.
Source : www.cnn.com