Sergio Ermotti, UBS Group CEO
Stefan Vermuth | Bloomberg | Getty Images
UBS Chief Executive Sergio Ermotti said on Wednesday that those concerned about the size of the bank’s balance sheet had been “indoctrinated” by academics and should “do their homework.”
UBS completed its acquisition of Credit Suisse in June 2023 following an emergency rescue deal brokered by Swiss authorities to prevent the then 167-year-old bank from collapsing and protect the Swiss economy.
Mr. Ermotti was brought back to UBS’s executive team to oversee the complex integration of Credit Suisse’s operations, a mission so far seen as a huge success by the market. The bank’s share price had fallen below 17 Swiss francs ($19.69) per share in the aftermath of the acquisition, but had recovered to more than 25 Swiss francs as of Wednesday morning.
However, the combined size of the new company’s balance sheet is estimated to be about twice the size of Switzerland’s entire GDP, raising concerns about the concentration of risks to the Swiss economy.
Ermotti said in an interview with CNBC on Wednesday on the sidelines of the World Economic Forum in Davos, Switzerland, that he understands why some Swiss citizens remain reluctant. They are “indoctrinated almost daily by many scholars” to improve their concentration. It is based solely on the size of banks’ balance sheets relative to a country’s GDP.
“If you look at risk-weighted assets as a percentage of GDP or as a percentage of balance sheet, you will see that the new UBS is effectively a very low risk, very focused business model. “The risk is with Swiss mortgages, which are Lombard loans and have very low risk,” he said.
Ermotti argued that the “new UBS”, which would combine fallen rivals to create a globally competitive, low-risk bank, was “a reflection of Switzerland”.
“Switzerland is a small country that far outperforms itself in many areas such as food, pharmaceuticals and innovation, and it is part of our economy that we have strong banks that can compete not just in Europe but around the world. “There is,” he said. He said.
He also argued that focusing on risks for Swiss taxpayers did not take into account the size of Swiss banks’ own tax contributions, and urged the public to “look not only at risks but also at returns”. did.
“In that sense, our role is to help those who are unconvinced, who want to listen to the debate, and to provide them with information so that they come to an informed and, hopefully, correct opinion. “I respect those who have a different opinion. But I expect them to do their homework,” he added.
