Ex-UBS CEO Is Back after 2 Years to Lead the Credit Suisse Takeover

by Damian Chmiel
  • Ermotti replaces Hamers and returns after a two-year break.
  • Hamers embraced the change and wanted to "serve the interests of the new combination."
Sertio Ermotti During World Economic Forum in 2017
Sertio Ermotti During World Economic Forum in 2017. Source: Flickr

UBS, a Swiss global investment bank, which agreed to buy troubled Credit Suisse last week, is bringing back its former CEO, Sergio P. Ermotti, to oversee the complex acquisition of the banking crisis victim.

UBS' Hamers to Make Place for Ermotti

Ermotti held the position of Chairman at UBS for nine years before being replaced by Ralph Hamers. He has been the Chairman of Swiss Re for the past two years, but in the wake of Credit Suisse's CHF 3 billion deal, the Board decided he would be a better helmsman for UBS than Hamers, who currently holds the role.

UBS agreed to take over the crosstown rival last week after investors lost faith in Credit Suisse's ability to bounce back from a problematic situation exacerbated by bank failures in the United States. CS shares fell 67% last year and 72% this year, responding to the company's deteriorating financial performance, client asset outflows and controversy over the Swiss lender's actions.

Credit Suisse Shares. Source: Tradingview.com
Credit Suisse Shares. Source: Tradingview.com

Ermotti will be officially appointed as the Group Chief Executive Officer and President of the Group Executive Board on 5 April 2023, after the Annual General Meeting. Hamer will remain at UBS and will work with Ermotti as an advisor during the transition process "to ensure a successful closure of the transaction and a smooth hand-over."

"I am of course sorry to leave UBS, but circumstances have changed in ways that none of us expected. I am stepping aside in the interests of the new combined entity and its stakeholders, including Switzerland and its financial sector – it has been a pleasure and privilege to lead this great bank to where it is today," Hamers commented in a press release.

Ermotti expressed his honor to be chosen to lead the bank during a significant time for all stakeholders and Switzerland. He thanked Hamers for his successful guidance at UBS. He acknowledged the urgent and challenging nature of the task. In addition, Emortti emphasized the need for a thorough and systematic evaluation of all options in the interest of the involved parties.

"I am conscious of the uncertainty many feel and I promise that, together with my colleagues, our full attention will be on delivering the best possible outcome for our clients, our employees, our shareholders and the Swiss government," the soon-to-be CEO added.

Deutsche Bank Falls after Credit Suisse

Credit Suisse is undeniably a bank with serious problems. In a belatedly released financial report filed with the US SEC, it indicated "material weakness," while in its 2022 report released in early February, it showed a CHF 7.3 billion annual loss and an outflow of more than 20% of assets under management.

When the market circulated the information that UBS had agreed to take over its troubled rival, global markets reacted with substantial depreciation. In the first reaction, Credit Suisse shares lost more than 60%, UBS slid 13%, and the entire European banking sector fell.

Although it seemed that the situation would be brought under control and the industry's problem, which began with the collapse of Silicon Valley Bank (SVB), eased, disturbing movements last week appeared on the chart of German lending giant Deutsche Bank. During Friday's session, the bank's shares fell 15% after the higher credit default swaps .

Deutsche Bank Shares. Source: Tradingview.com
Deutsche Bank Shares. Source: Tradingview.com

However, as it turned out, the panic was largely unwarranted, and the stock rebounded this week after testing a level below EUR 8, which is the lowest since October 2022. It clearly showed that investors remain intensely uncertain and sensitive to any news from the banking markets.

UBS, a Swiss global investment bank, which agreed to buy troubled Credit Suisse last week, is bringing back its former CEO, Sergio P. Ermotti, to oversee the complex acquisition of the banking crisis victim.

UBS' Hamers to Make Place for Ermotti

Ermotti held the position of Chairman at UBS for nine years before being replaced by Ralph Hamers. He has been the Chairman of Swiss Re for the past two years, but in the wake of Credit Suisse's CHF 3 billion deal, the Board decided he would be a better helmsman for UBS than Hamers, who currently holds the role.

UBS agreed to take over the crosstown rival last week after investors lost faith in Credit Suisse's ability to bounce back from a problematic situation exacerbated by bank failures in the United States. CS shares fell 67% last year and 72% this year, responding to the company's deteriorating financial performance, client asset outflows and controversy over the Swiss lender's actions.

Credit Suisse Shares. Source: Tradingview.com
Credit Suisse Shares. Source: Tradingview.com

Ermotti will be officially appointed as the Group Chief Executive Officer and President of the Group Executive Board on 5 April 2023, after the Annual General Meeting. Hamer will remain at UBS and will work with Ermotti as an advisor during the transition process "to ensure a successful closure of the transaction and a smooth hand-over."

"I am of course sorry to leave UBS, but circumstances have changed in ways that none of us expected. I am stepping aside in the interests of the new combined entity and its stakeholders, including Switzerland and its financial sector – it has been a pleasure and privilege to lead this great bank to where it is today," Hamers commented in a press release.

Ermotti expressed his honor to be chosen to lead the bank during a significant time for all stakeholders and Switzerland. He thanked Hamers for his successful guidance at UBS. He acknowledged the urgent and challenging nature of the task. In addition, Emortti emphasized the need for a thorough and systematic evaluation of all options in the interest of the involved parties.

"I am conscious of the uncertainty many feel and I promise that, together with my colleagues, our full attention will be on delivering the best possible outcome for our clients, our employees, our shareholders and the Swiss government," the soon-to-be CEO added.

Deutsche Bank Falls after Credit Suisse

Credit Suisse is undeniably a bank with serious problems. In a belatedly released financial report filed with the US SEC, it indicated "material weakness," while in its 2022 report released in early February, it showed a CHF 7.3 billion annual loss and an outflow of more than 20% of assets under management.

When the market circulated the information that UBS had agreed to take over its troubled rival, global markets reacted with substantial depreciation. In the first reaction, Credit Suisse shares lost more than 60%, UBS slid 13%, and the entire European banking sector fell.

Although it seemed that the situation would be brought under control and the industry's problem, which began with the collapse of Silicon Valley Bank (SVB), eased, disturbing movements last week appeared on the chart of German lending giant Deutsche Bank. During Friday's session, the bank's shares fell 15% after the higher credit default swaps .

Deutsche Bank Shares. Source: Tradingview.com
Deutsche Bank Shares. Source: Tradingview.com

However, as it turned out, the panic was largely unwarranted, and the stock rebounded this week after testing a level below EUR 8, which is the lowest since October 2022. It clearly showed that investors remain intensely uncertain and sensitive to any news from the banking markets.

About the Author: Damian Chmiel
Damian Chmiel
  • 1515 Articles
  • 32 Followers
About the Author: Damian Chmiel
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
  • 1515 Articles
  • 32 Followers

More from the Author

Executives

!"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|} !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}