According to reports, UBS Group AG (UBSG.S) has appointed Sergio Ermotti as the CEO to spearhead its major acquisition of Credit Suisse (CSGN.S). This move has surprised many and is believed to be a strategic decision to leverage Ermotti’s experience in restructuring the bank after the global financial crisis.
Sergio Ermotti, in his capacity as CEO of UBS Group AG, will be confronted with a range of critical tasks, including carrying out significant staff reductions impacting thousands of workers and scaling down Credit Suisse’s investment banking operations. Furthermore, he will have to regain the trust of affluent clients and ensure that UBS remains their preferred choice for investment opportunities.
Swiss Re welcomes Ermotti
Starting April 5th, Ermotti, the current chairman of Swiss Re (SRENH.S), will take over as the leader. Ermotti previously held the position of chief executive at UBS between 2011 and 2020. After his appointment, premarket trading on the Zurich stock exchange reflected a 2.3 percent increase in UBS shares.
In addition, Ermotti will be assuming control shortly after UBS acquired Credit Suisse, a Swiss bank, in a sudden merger orchestrated by Swiss regulators to alleviate the instability caused by Credit Suisse’s difficulties.
After acquiring Credit Suisse, UBS is now the only global bank in Switzerland, with around 260B francs ($170B) in state loans and guarantees. As a result, the Swiss economy’s reliance on a single financial institution has been amplified.
Analyst hails Ermotti’s background
According to Andreas Venditti, an analyst at Vontobel, Sergio Ermotti’s prior involvement in downsizing UBS’s investment banking operations following the financial crisis of over a decade ago has equipped him adequately for this new leadership position.
UBS CEO Ralph Hamers was absent during the announcement after the acquisition. He has consented to step down in the best interests of the newly merged entity, the Swiss financial industry, and the nation. The board’s actions were taken in response to the fresh challenges and priorities that UBS will have to confront following the acquisition.