UBS Group AG yesterday announced that it was bringing back former CEO Sergio Ermotti to lead the Swiss banking giant’s controversial acquisition of troubled rival Credit Suisse Group AG.
Ermotti spent nine years restoring UBS’ reputation after its bailout by the Swiss government and the central bank during the 2008 global financial crisis, as well as the US$2.3 billion in losses racked up by a rogue trader in 2011.
A UBS statement said he is due to take over on Wednesday next week from current boss Ralph Hamers, who has agreed to step down, but is to remain at his side during a transition period.
Photo: Reuters
“The task at hand is an urgent and challenging one,” Ermotti, who is currently chairman of reinsurance giant Swiss Re AG, said in the statement.
“In order to do it in a sustainable and successful way, and in the interest of all stakeholders involved, we need to thoughtfully and systematically assess all options,” he said.
Ermotti, 62, was CEO at UBS from 2011 to 2020. UBS shares opened 2.5 percent higher following the announcement of his return.
The marriage of UBS and Credit Suisse was hastily arranged by the government to prevent a global financial meltdown following fears of contagion from the collapse of three US regional banks.
The central bank has since admitted that the size of the resulting megabank could cause domestic problems in Switzerland.
UBS is already the biggest bank in the country — and will become even larger after swallowing up the second-most important lender in the wealthy Alpine nation for 3 billion Swiss francs (US$3.26 billion).
Switzerland, whose vibrant banking scene is a key part of the nation’s culture, has been shocked to the core by the enforced merger.
A recent poll showed a majority of Swiss people reject the deal and blame Credit Suisse’s leadership for the outcome.
The Swiss Financial Market Supervisory Authority is probing how to hold Credit Suisse bosses to account.
The Swiss parliament is planning a special session on Credit Suisse next month. It is also exploring whether to create an investigative committee to determine who was responsible for the debacle.
“I am conscious of the uncertainty many feel,” Ermotti said.
“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,” he said.
UBS said in a statement that its board decided to bring back Ermotti “in light of the new challenges and priorities facing UBS after the announcement of the acquisition.”
The bank said that Ermotti was “ideally placed” to pilot the integration of Credit Suisse after he “successfully repositioned UBS following the severe challenges” of the 2008 financial crisis.
UBS said that in his previous stint as CEO, Ermotti “achieved a profound culture change within the bank which allowed it to regain the trust of clients and other stakeholders, while restoring people’s pride in working for UBS.”
Hamers said he was sorry to leave UBS, but “circumstances have changed in ways that none of us expected.”
“I am stepping aside in the interests of the new combined entity and its stakeholders, including Switzerland and its financial sector,” Hamers added.
UBS and Credit Suisse were among the 30 banks around the world deemed too big to fail and therefore considered “global systemically important banks.”
Credit Suisse was undergoing major restructuring before the takeover to repair trust after the implosion of the US fund Archegos Capital Management LLC in 2021, which cost the lender more than US$5 billion.
That same year, its asset management branch was rocked by the bankruptcy of British financial firm Greensill Capital Ltd, in which about US$10 billion had been committed through four funds.
South Korea would avoid capitalizing on China’s ban on a US chipmaker, seeing the move by Beijing as an attempt to drive a wedge between Seoul and Washington, a person familiar with the situation said. The South Korean government would not encourage its memorychip firms to grab market share in China lost by Micron Technology Inc, which has been barred for use in critical industries by Beijing on national security grounds, the person said. China is the biggest market for South Korea semiconductor firms Samsung Electronics Co and SK Hynix Inc and home to some of their factories. Their operations in China
STATE SUBSIDIES: The talks over a factory in Dresden have a top end on par with what Japan is offering TSMC and outdo a cap other firms are being offered in Europe Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is in talks to receive German government subsidies for as much as 50 percent of the costs to build a new semiconductor fab in the country, people familiar with the matter said. The government is in ongoing negotiations with TSMC, as well as its partners on the project — Bosch Ltd, NXP Semiconductors NV and Infineon Technologies AG — the people said, asking not to be identified because the deliberations are private. No final decisions have been made and the final subsidy amount could still change. Any state aid must also
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) senior vice president of business development Kevin Zhang (張曉強) told reporters yesterday that talks over a possible plant in Germany are continuing and that the earliest decision would be in August. “I don’t want to get into the politics side of the thing, but I do think that there is a need for us to provide our customers with a diverse supply,” Zhang said, adding that Europe is a “very significant geography given the customer base ... [and] the demand.” Zhang did not confirm the size of subsidy or cost of the potential project or
POWER FORWARD: The US company’s bullish revenue projection also lifted the shares of Taiwanese chipmaker TSMC and Japanese equipment supplier Advantest Nvidia Corp’s forecast for surging revenue surprised even the most bullish analysts on Wall Street, propelling the chipmaker to the cusp of a US$1 trillion market capitalization and igniting a global jump in stocks linked to artificial intelligence (AI). The Santa Clara, California-based company gained as much as 29 percent in extended US trading, on course for a record high, after saying it expects sales to reach about US$11 billion in the three months ending July. That gain puts Nvidia on track also to rack up the biggest one-day valuation jump in US company history. Nvidia, the biggest supplier of the advanced
RSS