UBS CEO Sergio Ermotti is optimistic the «New UBS» will be able to compete and offer good service. The focus is on implementing the integration of Credit Suisse and on clients.
At the media conference on Thursday, UBS CEO Sergio Ermotti left no doubt the takeover of Credit Suisse was the only available option as was confirmed by an analysis of the situation.
«Credit Suisse had the wrong business model,» he said, pointing out it was making losses for a long time and would have continued to do so, adding that no amount of capitalization can buy client confidence. The period of instability is over and UBS is looking ahead and focusing on implementing the restructuring.
He dismissed shareholder accusations that UBS didn't pay enough for Credit Suisse and suggested anyone thinking Credit Suisse was bought on the cheap take an advanced finance course.
Full integration is the Best Option
Various scenarios for the future of Credit Suisse Switzerland were considered, but after thorough analysis, only two options remained-- full integration or spin-off. In the end, the consideration of what was best for employees, clients, and shareholders argued in favor of full integration, with a spin-off meaning 600 more job cuts.
He repeated there will be 3,000 redundancies in Switzerland as part of the restructuring, including around 1,000 at the domestic unit, but the process won't start before next year and will be gradual. The social plan put in place is solid and strong, and departing Credit Suisse and UBS employees have job good prospects, with the majority finding new jobs within a year, Ermotti said.
Statements on Jobs Aren't Meaningful
He declined to commit himself to statements on the future level of jobs, also outside Switzerland, saying such speculation is wrong. Talking about headcount isn't goal-oriented, he said. Normal attrition will also play a role, including retirements, or reductions in external services that are transferred to the bank.
In the first half of the year, around 8,000 employees left the bank, said CFO Todd Tuckner. Of those, about half were in the US and Asia Pacific, whereas in Switzerland, the figure was about 10 percent.
Integration is a complex operation, and restructuring comes through cooperation. He expressed satisfaction that customers have confidence in the bank, and set a goal to maintain market share, but couldn't rule out the possibility of negative synergies on results. There's a lot of movement with clients, some coming and some going, but UBS can offer good service, which is why it is attractive to clients, he said. He went on to say that Credit Suisse is also able to attract client money again.
Ending the Guarantee was Correct
Shutting down the loss guarantee was also the right decision, and the financial strength of UBS allows it to preserve the excellent parts of Credit Suisse, the CEO said.
Ermotti was also clear on the question of stricter regulation and the bank's size. «We're subject to regulatory requirements and if they change, we will comply. But we will also explain and represent our position.»
UBS isn't too big for Switzerland, noting the Cantonal banks taken together are significantly bigger than UBS.
On balance, UBS contributes more to Switzerland's strength than posing a problem to it, he said.
