In June 2023, UBS completed its takeover of Credit Suisse after a rescue deal was brokered by Swiss authorities to prevent the collapse of the institution and protect the Swiss economy. Sergio Ermotti, CEO of UBS, was brought back to oversee the complex integration of Credit Suisse’s business, which has been deemed a success by the market.
The bank’s share price has recovered from below 17 Swiss francs per share after the acquisition to over 25 Swiss francs as of Wednesday morning. However, some concerns have been raised about the new entity’s combined balance sheet, which is estimated to be around twice the size of the entire GDP of Switzerland, raising concerns about the concentration of risk in the Swiss economy.
Speaking to CNBC on the sidelines of the World Economic Forum in Davos, Switzerland, Ermotti addressed these concerns, stating that he understood why some portions of the Swiss population still have reservations, as they are being “indoctrinated almost daily by a lot of academics” and focusing solely on the size of the bank’s balance sheet versus the national GDP.
Ermotti contended that the “new UBS” incorporating its fallen rival to create a globally competitive, low-risk bank is a “reflection of Switzerland.” He argued that Switzerland is a small country that punches well above its weight in many sectors and having a strong bank that can compete globally is part of the country’s economy.
He also urged the public to consider the scale of the bank’s own tax contributions when worrying about the risk to the Swiss taxpayer, stating that the focus should be on the risks as well as the benefits. He emphasized the importance of informing people so they can come to an informed opinion, encouraging them to do their own homework.
Ermotti highlighted that the “new UBS” is a low-risk, focused business model and that the risk is mainly in Swiss mortgages, Lombard loans, and other low-risk assets. He emphasized the bank’s role in helping people who are not convinced, providing them with information so that they can form an educated opinion.
He emphasized his respect for people having other opinions but expects them to do their homework and consider all the aspects of the situation before making a decision.
UBS has been working to create a globally competitive, low-risk bank that reflects the strengths of Switzerland. Ermotti’s message is clear: it’s important to consider all the information and do your own research before forming an opinion.
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