UBS CEO Sergio Ermotti has been reluctant to define specific, bank-wide spending cuts – until now. The Swiss banker signaled he is ready to get ruthless.
The long-standing UBS boss struck a far feistier tone in an interview with «Bloomberg» (behind paywall) in Monday. «We are obsessed about» spending, he told the newswire. «It’s not just an investment bank issue, it’s across the board,», he noted. In short, nothing is sacred anymore.
The remarks translate to a warning as much as they do a reversal. The warning is that Ermotti will leave no stone in UBS unturned in order to bolster profitability. Spending cuts have taken on far more urgency as the long hoped-for pickup in client activity didn't materialize, all while Swiss banks are groaning under the heft of charges of big Swiss franc deposits at their central bank.
«Tactical» Cuts So Far
His tone is also a reversal or Ermotti's long-held belief that deep cost cuts aren't the way to growth – and indeed the Swiss wealth manager (unlike Credit Suisse) hasn't issued bank-wide cut targets for years. The topic arose from last year's mega-merger of its main wealth units, as well as the persistently poor performance of the UBS' stock.
In spring, Ermotti pledged cuts of $300 million, as a tactical measure throughout this year. Last month, UBS' investment bank was forced to deepen cuts after a 60 percent slide in revenue on the year. Unit co-heads Rob Karofsky and Piero Novelli are aiming for a leaner, more nimble securities unit of global banking (advisory) und global market (trading) units.
«I'm Not Pleased»
The cuts began earlier this month, according to «Financial News,» which reported that several hundred jobs are on the block in a $90 million savings bid. On Monday, Ermotti indicated that may be just the start.
«When I look at the first nine months of the year, I am not pleased,» Ermotti told Bloomberg. «If market conditions don’t improve, we need to be at the forefront of putting the bar higher in changing how we do investment banking.»
M&A: Anything Possible
The remarks underscore that the Swiss native, who until now has explicitly ruled out another major round of big job cuts at UBS to perk up the bank's margins, has abandoned some of his reticence. He is also punchier about acquisitions, which UBS has shied away from in recent years.
«Everything is up for discussion all the time,» he said. «We can’t rule out anything.» He also has a message for unsatisfied shareholders: «We can do better, and we’re going to do even more to respond to the market conditions,» he noted. The newswire will hammer out more specific three-year plans by January
