Good sign: Ermotti exits an earnings news conference in Zurich. The executive is highly critical of Credit Suisse, which has a business model that is ‘not right’. He is, however, optimistic that Credit Suisse can be integrated successfully into UBS. — Bloomberg
ZURICH: The new expanded UBS is not too big for Switzerland following the bank’s emergency takeover of fallen rival Credit Suisse, chief executive officer Sergio Ermotti says.
“UBS is not too big. Size is not only about the relationship of the balance sheet to the country’s,” Ermotti told an event in Zug, Switzerland.
UBS completed its emergency takeover of Credit Suisse in June, forging a Swiss banking and wealth management giant with a US$1.6 trillion balance sheet.
The figure is far larger than the entire economic output of Switzerland that stood at US$878bil in 2022.
Ermotti said 20% of the combined bank’s balance sheet was relatively stable and invested in the Swiss property market, while the bank had more than US$200bil in loss-absorbing capital.
The executive, who returned to UBS in April to steer the Credit Suisse takeover, was also critical of Credit Suisse.
“Credit Suisse went under because it had a business model for years which was simply not right.
“The bank unfortunately made billions in operating losses over the last few years and could have gone on making losses,” he said. “The bank was no longer viable.”
Credit Suisse failed after rattled investors withdrew billions after a series of losses and missteps, triggering a liquidity crisis.
Ermotti said some of the money had been transferred to UBS, while some had gone to other banks in Switzerland and even abroad.
Still, the chief executive was optimistic that Credit Suisse could be integrated successfully into UBS.
UBS last week said it would reduce costs by US$10bil, and added that it will axe 3,000 jobs in Switzerland alone.
“More than 99% of the people at Credit Suisse are good people, people with integrity,” Ermotti said.
“I don’t think it will be a problem to integrate Credit Suisse.”
Eralier rerports had it that UBS planned to eventually reduce the total combined workforce by around 30%, or 35,000 people, with the headcount at Credit Suisse at around 45,000.
Analysts had warned of massive job cuts because of the overlapping of activities at two of the world’s biggest banking firms. — Reuters
