Swiss bank UBS said today (March 29) Sergio Ermotti, its former chief executive between 2011 and 2020, will return as CEO to tackle the bank’s integration with Credit Suisse (CS), the struggling investment bank UBS agreed to acquire earlier this month. Ermotti will replace current UBS CEO Ralph Hamers, effective April 5.
The leadership change comes “in light of the new challenges and priorities facing UBS” after the acquisition of Credit Suisse, UBS said in a statement today. Hamers will remain at the bank during the transition period, UBS said.
Who is Sergio Ermotti?
Ermotti, 62, is currently the chairman of Swiss Re, a Swiss insurance giant. He served as UBS’s CEO from 2011 to 2020 and was credited for restructuring the bank after a government bailout during the 2008 global financial crisis.
In a statement today, UBS praised Ermotti for successfully repositioning the bank in post-2008 years and achieving “a profound culture change” that allowed the bank to “regain the trust of clients and other stakeholders, while restoring people’s pride in working for UBS.”
“We felt we had a better horse” in Ermotti, UBS Chairman Colm Kelleher said during a press conference today. “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.”
Ermotti’s banking career began in the 1980s with a Citibank branch in Zurich. He then worked for U.S. investment bank Merrill Lynch for 16 years across its offices in Zurich, London and New York.
Before joining UBS in 2011, Ermotti held executive roles at Italian bank UniCredit for five years.
Outside banking, Ermotti is a board member of Italian luxury fashion house Ermenegildo Zegna.
What makes Ermotti the right person to oversee the Credit Suisse takeover?
UBS on March 19 agreed to take over Credit Suisse for $3.2 billion, a deep discount from Credit Suisse’s market cap at the time. The merger was orchestrated by the Swiss government as it looked to stem a systemic risk threatening the global banking system.
Credit Suisse has been mired in losses and scandals for several years. Its financial situation deteriorated suddenly this month when it saw a customer exodus following the collapse of Silicon Valley Bank (SVB), which sent a panic wave across the global banking sector.
At today’s press conference, UBS chairman Kelleher said his bank plans to cut most of Credit Suisse’s risky investment banking business and reduce the overall size of UBS’s investment banking unit. The move will likely result in massive layoffs and restructuring—an area of Ermottis’s expertise.
Ermotti “has important qualities lacked by Hamers and critical to shepherding the emergency takeover of Credit Suisse Group AG,” wrote Paul Davies, a Bloomberg finance columnist in an op-ed today. “First, the experience of radically restructuring UBS’s own investment bank after the global financial crisis; second, the statesman-like presence needed to keep national authorities and the bank’s staff onside while also trying to win over a skeptical Swiss public.”
Kelleher told reporters today he’s worried about the bad culture at some Credit Suisse units spreading to UBS after the merger. Given his track record of rebuilding UBS’s company culture following the financial crisis, “Ermotti has a chance of keeping the Credit Suisse people he wants and ensuring they fall in line with a new way of doing things,” Davies wrote.
“It helps too that Ermotti is Swiss,” he added, noting that Hamers is Dutch and Kelleher is Irish. “He restores an unwritten rule that at least one of the two top roles at UBS be held by a local.”