UBS CEO says Swiss public 'indoctrinated' to worry about bank's balance sheet

Sergio Ermotti, chief government officer of UBS Group

Stefan Wermuth | Bloomberg | Getty Images

UBS CEO Sergio Ermotti on Wednesday mentioned folks with issues about the dimensions of the financial institution’s balance sheet are getting “indoctrinated” by lecturers and may “do their homework.”

UBS completed its takeover of Credit Suisse in June 2023 after an emergency rescue deal was brokered by Swiss authorities to stop the then 167-year-old establishment’s collapse and protect the Swiss economy.

Ermotti was brought back to the helm of UBS to oversee the advanced integration of Credit Suisse’s enterprise — a mission to date deemed a convincing success by the market. The financial institution’s share value has recovered from under 17 Swiss francs ($19.69) per share within the aftermath of the deal to over 25 Swiss francs as of Wednesday morning.

However, the brand new entity’s mixed balance sheet is estimated to be round twice the dimensions of the complete GDP of Switzerland, elevating issues about the focus of danger within the Swiss economic system.

Speaking to CNBC on the sidelines of the World Economic Forum in Davos, Switzerland, on Wednesday, Ermotti mentioned he understood why some parts of the Swiss inhabitants nonetheless have reservations, as they’re being “indoctrinated nearly every day by a variety of lecturers” and focusing solely on the dimensions of the financial institution’s balance sheet versus the nationwide GDP.

“If you take a look at risk-weighted belongings as a share of GDP or as a share of our balance sheet, you’ll uncover that the brand new UBS is de facto very low danger, very centered enterprise mannequin. The danger we now have is in Swiss mortgages, in Lombard loans, in stuff that may be very low danger,” he mentioned.

Ermotti contended that the “new UBS” incorporating its fallen rival to create a globally aggressive, low-risk financial institution is a “reflection of Switzerland.”

“Switzerland is a small nation that punches properly above its weight in lots of sectors — in meals, in pharma, in innovation — and having a powerful financial institution that may compete, not solely in Europe, however globally, is a part of our economic system,” he mentioned.

He additionally argued that the concentrate on the chance to the Swiss taxpayer fails to consider the dimensions of the financial institution’s personal tax contributions, urging the public to “take a look at the dangers but additionally the advantages.”

“In that sense, our function is to assist the people who find themselves not satisfied, that need to hear to arguments, to inform them in order that they arrive to an opinion that’s knowledgeable, hopefully the suitable one. I respect folks having different opinions, however I do count on them to do their homework,” he added.

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