UBS hired its former CEO, Sergio Ermotti, to retake his old role April 5 “in light of the new challenges and priorities” related to the bank’s government-forced acquisition of rival Credit Suisse, according to a Wednesday press release.
Ralph Hamers, who succeeded Ermotti as UBS’s CEO in 2020, “has agreed to step down to serve the interests of the new combination,” but will stay on as an adviser throughout a transition period, the bank said Wednesday.
“The board decided in the round, balancing everything up, that for the next phase of this singularly most important and complicated transaction, Sergio would be the preferred executioner,” UBS Chairman Colm Kelleher said, according to Bloomberg.
The move puts a Swiss native in one of UBS’s top two posts — something it’s lacking now. Hamers is Dutch; Kelleher is Irish. But Ermotti’s nationality is not primarily why UBS sought him out, Kelleher said.
Still, the Swiss public appears to need something to convince it that the UBS-Credit Suisse tie-up is worthwhile. Roughly three-quarters of recent survey respondents said they believed the deal would weaken the Swiss financial center, according to Bloomberg.
“We have to understand that there is an emotional reaction to what happened and this is part of the complexities that we will need to manage,” Ermotti told the wire service.
Ermotti, it seems, did not need convincing.
"I felt a sense of call-of-duty aspect,” he said, of retaking the CEO role at UBS, according to CNBC. “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 [for UBS] was a chapter of doing a transaction like this one.”
The integration of UBS and Credit Suisse will mark the first time since 2008 that two institutions deemed systemically important have been combined.
At Wednesday’s press conference, Kelleher said he first called Ermotti just hours after the Credit Suisse deal was struck, to see if he was interested in the CEO post, according to the Financial Times.
“Hopefully what we’re doing is the right thing, and I think we’ve got the right team assembled,” Kelleher said Wednesday, according to The Wall Street Journal. “We need to explain our story to all our stakeholders and explain why this is a great deal, if it’s executed properly, but it comes with risks.”
He added, "Clearly regulators have a right of saying no.”
In Ermotti, UBS regains an executive who steered the bank for nine years, slashing thousands of investment-banking jobs and placing a focus on wealth management. He’ll likely be asked to do that again: The presumable path forward involves reducing most of Credit Suisse’s investment bank — such that the combined investment bank is smaller than UBS’s was before the acquisition, The Wall Street Journal reported.
"There are cultural issues between Credit Suisse and UBS,” Kelleher said of the investment-banking units, according to CNBC. “We do not want to import a bad culture into UBS.”
Ermotti, for his part, said the “task at hand is an urgent and challenging one.”
“To do it in a sustainable and successful way … we need to thoughtfully and systematically assess all options,” he said in Wednesday’s press release.
Under Hamers, UBS looked to expand its wealth-management presence in the U.S. — largely through a $1.4 billion acquisition of Wealthfront that was later abandoned. Still, UBS said, Hamers “delivered record results in two successive years.”
Kelleher called Hamers “an outstanding CEO of UBS” who “put us in a position to stabilize Credit Suisse.”
“On behalf of the whole Board, I would like to express my deep respect and gratitude for all that Ralph has achieved over the last two-and-a-half years … as well as his understanding of the current situation and willingness to step down,” Kelleher said.
‘A better horse’
Hamers told CNBC that UBS wants to "take away uncertainty as soon as we can" regarding restructuring and prospective layoffs.
"I always say the big debate nowadays is not too big to fail, it's too small to survive,” he said.
Combining with Credit Suisse “is UBS’s single most important task, and I am confident that Sergio will successfully guide the bank through this next phase,” Hamers said. “I am of course sorry to leave UBS, but circumstances have changed in ways that none of us expected.”
Hamers joined UBS after a 25-year stint at ING, including seven as CEO. A long-running money-laundering scandal there did cloud his tenure. Kelleher, for one, said the shadow of that did not influence UBS’s decision to replace him, Bloomberg reported.
Rather, “we felt we had a better horse” in Ermotti, Kelleher said, according to The Wall Street Journal.
Since leaving UBS in 2020, Ermotti has served as chair of insurer Swiss Re. He will stand for re-election at that company’s annual general meeting April 12 but intends to step down afterward, UBS said in its release.
Ermotti has, however, expressed interest in remaining at UBS for the long term, CNBC reported.
“I am conscious of the uncertainty many feel, and I promise that, together with my colleagues, our full attention will be on delivering the best possible outcome for our clients, our employees, our shareholders and the Swiss government,” Ermotti said in UBS’s release.