CNBC reported that UBS appointed Sergio Ermotti as the new Group CEO. The event took place on Wednesday after the recent acquisition of Credit Suisse. This will be effective from April 5 this year, as stated by UBS in a statement. Shares of UBS went up 2 percent at the opening after the news.
Why Sergio Ermotti is replacing Ralph Hamers as UBS CEO
Sergio Ermotti was the group CEO at UBS for 9 years, from November 2011 to October 2020. Sergio Ermotti will replace the present CEO Ralph Hamers. He is currently the chairman of the Swiss Re insurance company. However, Hamers will stay at UBS to advise the bank. This shall be for the transition period to ensure good closure of the transaction and a smooth handover, as stated by the company. The change in the CEO position is because of several new challenges and several priorities that UBS is facing after the announcement of the acquisition.
Sergio Ermotti repositioned the bank after the 2008 global financial crisis and achieved a massive culture change. Thus, the Swiss bank regained the faith of its clients and stakeholders and restored people’s pride in working for UBS.
Reuters reported that Ralph Hamers told employees about the takeover. He said that UBS did not buy Credit Suisse just to close it. In the announcement, Colm Kelleher- the UBS Chairman, called Ralph Hamers an outstanding CEO because he led UBS to unprecedented success in a challenging environment. He said that the takeover of Credit Suisse supports the existing strategy of UBS, but it also imposes new priorities on the group. Colm Kelleher said that he is confident that with his unique experience, Sergio Ermotti will provide the successful integration that is important for the banks’ employees, clients, and investors.
What happened with Credit Suisse
In a deal led by Swiss regulators, UBS was set to buy its rival bank Credit Suisse. The deal was for dollars 3.2 billion. The government took the emergency move to stem a contagion that threatened the global banking system.
The present situation
The leadership change surprised many market observers, but one analyst commented that it was just a part of the result of the merger deal.
On Wednesday, the head of the equity strategy at Saxo Bank, Peter Garnry, told CNBC that, as with all the forced mergers or acquisitions of not equal parties, you may always have friction. Clearly, the now ex-CEO at UBS was unhappy, and thus the fallout was seen.
Peter Garnry further said that everything since the worldwide financial crisis is leading all down one path. This is about bigger banks and more concentration, which leads to fragility and less competition. But, he said that its effect might not be good for the overall financial system in the long-term scenario.
He said that the discussions in the U.S. after the collapse of the SVB or the Silicon Valley Bank are about to what extent there should be guarantees on deposits over the FDIC deposit guarantee limit. He then questioned the purpose of banks, private money, etc.
Peter Garnry also commented that there are big questions about this and where all are heading in the banking system.