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UBS chief executive Sergio Ermotti has hit out at European politicians and regulators for deliberately suppressing the continent’s banks and allowing US rivals to dominate globally.
Europe’s approach to managing its lenders stood in stark contrast to watchdogs in the US, which had encouraged their lenders to expand internationally, Ermotti argued.
“Europe did everything they could have done [not] to allow banks to be bigger or successful,” Ermotti said in an interview with the head of Norway’s sovereign wealth fund, the Swiss bank’s second-biggest shareholder.
Ermotti has re-emerged as a leading spokesman for European banks since returning to UBS in the wake of its rescue of former rival Credit Suisse in the most significant merger in the sector since the financial crisis.
“There is a political desire to not allow banks to become too big [in Europe],” Ermotti said in a podcast with Norges Bank Investment Management chief executive Nicolai Tangen, released on Wednesday.
“[There is] still a lot of parochial thinking in Europe about being big banks. So each [country] wants to have their own national champion, forgetting that winning the national championships doesn’t take you very far in terms of global [dominance].”
UBS agreed to rescue Credit Suisse last March in a deal orchestrated by Switzerland’s finance ministry, financial regulator and central bank. Ermotti said the only reason UBS was allowed to take over its rival was because Credit Suisse was failing after years of loss making.
Norway’s $1.6tn oil fund is the second-largest shareholder in UBS, behind BlackRock, having increased its stake from 3.5 per cent to 5 per cent when the Credit Suisse takeover was completed last summer.
“The reason we thought [the takeover] was so attractive . . . is because it’s the kind of merger you can never do in peacetime,” said Tangen, the former hedge fund manager who has been chief executive of the world’s biggest sovereign wealth fund for the past four years.
UBS’s takeover of Credit Suisse, which controversially involved $17bn of bonds being wiped out, has created the biggest global wealth manager and a dominant player in Swiss and European banking.
“In banking, all the mergers that create any value are coming at moments of stress,” said Ermotti. “Look back at the US banks [and] how they got into their position. It’s all about them being allowed or being asked during the financial crisis to grab or put together banks that were about to fail or they were failing.
“It is a pity that it takes a crisis to create something that makes sense.”
The 63-year-old Swiss also spoke about his involvement in helping the board identify a successor for when he steps aside after the integration of Credit Suisse is complete, a process that is due to run until late 2026 or early 2027.
He echoed the point made by chair Colm Kelleher last year that there should be “more than two or three” candidates ready by then, indicating that executives with experience of different parts of the business would be favoured.
“As you go up [the organisation], you have a lot of very talented people, a lot of specialised people,” he said.
“So it’s not easy to find the people that can then take a broader and more complete understanding of the business.”
