Sergio Ermotti returns as UBS CEO to oversee Credit Suisse takeover

UBS appointed Sergio Ermotti as its new group CEO on Wednesday following its recent acquisition of Credit Suisse.

The move will take effect on April 5, UBS said in a statement.

UBS shares rose 2% at the start of trading.

Ermotti, who served as Group CEO of UBS for nine years from November 2011 to October 2020, will succeed current CEO Ralph Hamers. Ermotti is currently Chairman of insurance company Swiss Re.

Hamers will remain with UBS during the transition period to advise banks to “ensure the transaction’s success and smooth delivery,” the company said.

In a deal orchestrated by Swiss regulators, Switzerland’s largest bank UBS agreed on March 19 to buy struggling rival Credit Suisse for 3 billion Swiss francs ($3.2 billion). The move comes as governments try to stem an epidemic that threatens the global banking system.

The management change will be made “in light of the new challenges and priorities facing UBS following the announcement of the acquisition,” UBS said Wednesday.

The statement noted how Ermotti “successfully repositioned” the bank after the global financial crisis of 2008 and “achieved significant cultural change within the bank.” The Swiss lender has “restored the confidence of its clients and other stakeholders, and at the same time the pride of those who work at UBS,” the bank said.

Hamers told an employee at the government-led acquisition that UBS bought Credit Suisse “not just to shut it down,” according to Reuters.

In the announcement, UBS Chairman Colm Kelleher called Hamers an “outstanding” CEO who has led UBS to “unprecedented success despite a challenging environment”.

The Credit Suisse acquisition will support UBS’s existing strategy but will impose new priorities on the group, he said.

“With his unique experience, we are confident that Sergio will succeed in integrating the bank’s customers, employees, investors and all of Switzerland’s very important interests.”

The move surprised some market players, but one analyst said it was only part of the impact of the merger deal.

Saxo Bank’s head of equity strategy Peter Garnley said: “As with all forced mergers and acquisitions of unequal parties, there is always the potential for this friction to occur, and that is what we are seeing here. I think so,” he told CNBC.

“It was clear that the current former CEO of UBS wasn’t very happy with this phony wedding, and I think that’s the impact we’re seeing now.”

In particular, in an interview with the Swiss newspaper NZZ am Sonntag in September, Ermotti argued that there was no “compelling” economic reason for Switzerland to have two large banks.

“I think everything we’ve seen since the global financial crisis with regulation is leading us down one path: bigger and bigger and more concentrated banks. That’s vulnerability. It will not only lead to less competition, but it will also lead to less competition.In the long run, it will be good for the financial system as a whole,” Garnry argued.

“That puts the conversation out there: Are we moving toward more general interference with money itself?”

After the failure of the Silicon Valley Bank, the debate in the United States was, “How much guarantee is needed for deposits exceeding the FDIC’s deposit guarantee limit? If so, what is the purpose of having banks, private money, etc.?” something? “

“I think there’s a big question about this and where it’s going in the banking system,” Garnry said.

— CNBC’s Lim Hui Jie contributed to this report.