ZURICH—UBS Group AG has rehired Sergio Ermotti as CEO to steer its massive takeover of neighbor Credit Suisse—a surprise move to take advantage of the Swiss banker’s experience rebuilding the bank after the global financial crisis.
The trader turned corporate problem fixer faces the tough challenge of laying off thousands of staff, cutting back Credit Suisse’s investment bank, and reassuring the world’s wealthy that UBS remains a safe harbor for their cash.
“We felt we had a better horse,” UBS chairman Colm Kelleher said of the decision to replace current CEO Ralph Hamers after less than three years in charge.
Kelleher said he brought back Ermotti because he was best equipped to see through the biggest deal in finance since the global banking crash more than a decade ago.
“This is not a Swiss solution,” he said, referring to the role Ermotti’s nationality might have played in the hiring, and instead emphasized that his focus was on the large risks of making the merger work for UBS.
“Being Swiss helps,” Kelleher said. “But the majority of our business is global.”
Ermotti, who was chief executive of UBS from 2011 to 2020 and is now chairman of Swiss Re, will take the helm on April 5. The 62-year-old is credited with executing UBS’s turnaround after a series of scandals and losses nearly caused the bank’s implosion.
He made a plea on March 29 for “a little bit of patience” over a “couple of months” to allow the bank to forge its strategic plan. “We cannot rush into decisions which are regrettable,” he told journalists.
He said he had returned to UBS after feeling what he termed “a call of duty” and added he had always wanted to be involved in a massive transaction such as the takeover of Credit Suisse.
He takes charge weeks after UBS bought its Swiss rival in a shotgun merger engineered by Swiss authorities to stem turmoil after Credit Suisse ran aground.
That deal makes UBS Switzerland’s only global bank, underpinned by roughly 270 billion francs ($170 billion) in state loans and guarantees, a risky bet that makes the Swiss economy more dependent on a single lender.
Hamers Hands Over Reins
Analysts said Ermotti’s experience paring back UBS’s investment bank after the 2008 financial crash made him well equipped for the job.“The decision to bring back Sergio Ermotti is very positive as it reduces integration and execution risk by 80 percent,” said Davide Serra, CEO of Algebris Investments.
“Sergio has already reduced risk and made the investment bank serve its clients and not its investment bankers as Credit Suisse did. As a shareholder and bondholder I am very happy.”
Ermotti had earlier described the task of integrating UBS and Credit Suisse as “urgent and challenging.”
Outgoing CEO Hamers, who had succeeded Ermotti in November 2020, “has agreed to step down to serve the interests of the new combination ... and the country,” UBS said.
Hamers, who will stay on as an adviser, had no big-ticket mergers and acquisitions experience and faced the task of combining two banks with $1.6 trillion in assets, more than 120,000 staff, and a complex balance sheet.
The Dutch executive was a notable absence from the announcement of UBS’s takeover of Credit Suisse on March 19. The next day, Hamers looked bleary-eyed as he described the end of Credit Suisse as a “sad day” that nobody wanted.
A nearly 30-year veteran of Dutch lender ING, Hamers was a surprise choice when he was appointed to lead UBS, as he had little experience in investment banking or wealth management.
