Mr. Ermotti led UBS for nine years until 2020 and is credited with the bank’s recovery from a government bailout in 2008. He will succeed current CEO Ralph Hamers, who has led the bank for the past three years, on April 5 .
“We felt we had a better horse,” said UBS chairman Colm Kelleher in Mr Ermotti, explaining the bank’s decision to replace Mr Hamers.
With the return of Mr. Ermotti gets UBS two experienced fix-it bankers at the helm. Mr. Kelleher spent three decades at Morgan Stanley, guiding it through the global financial crisis as chief financial officer. He later helped refocus Morgan Stanley’s business from riskier investment banking to more stable asset management. He retired as number 2 in 2019 and joined UBS last year.
Mr. Ermotti will take on a role he held for the past decade, when he cut thousands of jobs and shut down much of UBS’s investment banking business. He will now take on the task of doing the same with Credit Suisse, integrating the major parts of the two banks’ businesses that overlap. These include wealth management, wealth management and Swiss retail banks.
Mr. Ermotti, currently chairman of reinsurance giant Swiss Re AG
, will resign his position. He retains his position as a leading independent director on the board of directors of fashion group Ermenegildo Zegna.
Mr. Ermotti was born in Switzerland, while Mr. Hamers is from the Netherlands. The return of a Swiss at the helm could help reassure the bank’s sizable domestic client base and politicians in the country, who have resisted the reputational damage caused by Credit Suisse’s demise.
Mr Kelleher said that replacing Mr Hamers should not be seen as a Swiss solution, although he and Mr Hamers said rehiring Mr Ermotti would serve Switzerland’s interests.
UBS agreed to acquire Credit Suisse for $3.2 billion earlier this month. The takeover, spurred by Swiss regulators, aimed to prevent further damage to the banking system.
The deal combines two sprawling financial institutions that have battled each other for decades. It puts UBS in charge of winding down Credit Suisse’s huge trading positions and laying off executives and staff. The acquisition marks the first time since the global financial crisis that two institutions considered systemically important by international regulators have been merged.
Credit Suisse is Switzerland’s number 2 bank in terms of assets after UBS. The acquisition will see UBS double its market share in the country and in some other businesses. Swiss regulators have granted UBS a year-long exemption for the additional capital the combined bank will need. The combined group would have about 125,000 employees worldwide, though tens of thousands of jobs will disappear, UBS has indicated.
Mr Ermotti said UBS should “assess all options carefully and systematically”.
Mr. Kelleher said the plan will be to shrink most of Credit Suisse’s investment bank and make the overall investment bank at UBS even smaller than it was before the takeover. Credit Suisse’s large investment bank was the cause of many of the problems that led to its downfall, including trading portfolios that Credit Suisse had estimated would take years to settle.
UBS’ pre-acquisition strategy had been to retain and attract the world’s wealthy and do more banking in the US. It had said it was not considering any major acquisitions. Mr. Kelleher has said he never wanted the call from the Swiss authorities to buy Credit Suisse, but it also presented an opportunity.
“Hopefully what we’re doing is the right thing and I think we’ve put together the right team,” Kelleher said on Wednesday. “We need to explain our story to all our stakeholders and explain why this is a lot, if done right, but it comes with risks.”
Mr. Kelleher said he appreciated Mr. Hamers’ understanding of the current situation and willingness to step down.
Analysts and investors have said the combination could be powerful in terms of revenue generation, but will take years to execute. The two Swiss banks both manage the wealth of billionaires, royalty and ultra-wealthy families, and have Wall Street investment banks, in addition to home loans. The knock-on effects of the purchase for UBS, such as customer diversification by moving their money elsewhere, are far from clear.
UBS shares rose about 1.5% on Wednesday and are about 5% higher than where they traded before the deal.
Mr Hamers succeeded Mr Ermotti in November 2020. Before that, he was CEO at the Dutch bank ING Groep NV, which he helped restructure. He received rare plaudits in banking from Silicon Valley bosses for scaling an asset-light company with automation.
He brought a different vibe to UBS, introducing agile working and other buzzword practices, while also recognizing the lender needed to improve digital interaction with customers.
He wore T-shirts to talk to customers about the future of digital banking and was known for wearing orange sneakers at ING, the signature color of that bank.
UBS said it would try to reach more mainstream wealthy clients in the US, and planned to buy digital wealth advisor Wealthfront before going back on the deal last year.
Mr. Hamers identified a culture change in the workforce since the tenure of Mr. Ermotti, the typical well-dressed Swiss businessman. Mr Hamers opposed UBS’s traditional practices after it itself emerged from previous bank mergers with layers of management.
Write to Margot Patrick at email@example.com and Serena Ng at Serena.Ng@wsj.com
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