Sergio Ermotti returns as UBS chief to steer Credit Suisse takeover

UBS has ousted its chief executive and brought back former boss Sergio Ermotti to steer the takeover of Credit Suisse less than two weeks after the announcement of the contentious $3.25bn rescue deal.

Ermotti, UBS chief executive for nine years before stepping down in 2020, will lead the effort to merge two of the world’s biggest banks after Ralph Hamers was pushed aside.

“I cannot emphasise how big a deal this is in terms of financial history and financial engineering that’s required,” UBS chair Colm Kelleher said on Wednesday. “It’s about having the best person in our opinion to effect the execution of this merger.”

He added he had initially called Ermotti to see if he was interested in the job on Monday last week — the day after Hamers gave a fumbling performance on an analyst call on the takeover.

Hamers said he was “stepping aside in the interests of the new combined entity and its stakeholders, including Switzerland and its financial sector”.

He added: “I am of course sorry to leave UBS, but circumstances have changed in ways that none of us expected.”

The takeover, orchestrated by Swiss authorities, will create the world’s fourth largest bank, with 120,000 staff and $5tn of assets under management.

But it is politically divisive, with more than three-quarters of Swiss voters calling for the combined mega bank to be split up by new legislation.

Bondholders are also preparing legal proceedings against the Swiss government after $17bn of high-risk securities were wiped out in the transaction.

Kelleher said Ermotti’s work in scaling back UBS’s investment bank a decade ago and his experience of operating at a global level were essential for overseeing the biggest bank merger since 2008.

He added that Hamers, chief executive since November 2020, had put the bank “in a position to stabilise Credit Suisse and ensure a successful integration”, but that Ermotti would “hit the ground running”.

Ermotti will start on April 5, while Hamers will remain as an adviser for a transition period.

UBS shares closed nearly 4 per cent higher, with investors welcoming the change.

“As a shareholder and bondholder, we are very happy,” said Davide Serra, chief executive of Algebris, who added that Ermotti would reduce integration risk and “serve [the bank’s] clients and not . . . investment bankers”.

Since leaving UBS, Ermotti has chaired the reinsurer Swiss Re as well as a special purpose acquisition company that bought Italian luxury fashion group Ermenegildo Zegna.

Mark Diethelm, an analyst at Vontobel, said Ermotti’s experience in transforming UBS after the financial crisis would be crucial, noting that the bank was “already facing significant political pressure due to its large size and importance for the country”.

Hamers joined UBS from ING after spending 25 years at the Dutch lender, seven of them as chief executive. He was a surprise choice for the UBS job, despite having been handpicked by then-chair Axel Weber.

Critics pointed to his lack of experience in wealth management and investment banking, UBS’s two biggest businesses. He was viewed as a digital expert who could help cut back the bank’s cost base, but his ideas took time to implement. It was more than a year before he unveiled his plan for the business, which consisted of targeting wealthy clients in the US and Asia.

But a central plank of the strategy — a $1.4bn takeover of US robo-adviser Wealthfront — was aborted last year. The deal found little support within UBS’s senior ranks because of the cost of the deal and the limited number of rich customers it would attract.