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UBS on Wednesday decided it would let a Swiss national guide the integration of its two banking heavyweights.
UBS
UBS,
UBSG,
announced that effective on April 5 it will bring back former chief executive, Sergio Ermotti, to his former role, replacing Ralph Hamers, who is Dutch, after reaching a deal to buy Credit Suisse.
Ermotti, who ran UBS from 2011 to 2020, hails from the Italian-speaking city of Lugano of Switzerland, though he’s also fluent in English, German and French.
Hamers alluded to the need to have a Swiss national take control. “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,” said Hamers in a statement.
Ermotti, and UBS chairman Colm Kelleher, drove that point home. “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,” said Ermotti.
“With his unique experience, I am very confident that Sergio will deliver the successful integration that is so essential for both banks’ clients, employees and investors, and for Switzerland,” said Kelleher. On a conference call, Kelleher said he contacted Ermotti about coming back the day after the announced deal, the Associated Press reported.
Last week a poll found two-thirds of Swiss citizens “angry” about the deal, which saw UBS agree to buy Credit Suisse
CSGN,
CS,
for an initial value of 3 billion francs as well as a Swiss government backstop. The offer is now worth slightly more, 3.2 billion francs.
Ermotti was known for guiding UBS into more of a wealth-management focus and away from investment banking, which is precisely the transition UBS promises for Credit Suisse. Ermotti, who is relinquishing the chairman role at Swiss Re
SREN,
said he had contemplated such a tie-up when he was at UBS.
RBC Capital Markets became the latest sell-side firm to express caution over the deal, despite the potential, as it downgraded UBS to sector perform from outperform and cut its price target to 20 francs from 24 francs. “The size of marks, financial stability concerns, execution risk and potential pressure to spin off the Swiss business are some of the headwinds, in our view,” said analysts led by Anke Reingen.
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