UBS Chairman Axel Weber has long cherished a dream for his bank. The new boss Ralph Hamers thinks it is difficult to realize.
Axel Weber's (pictured below) dream of turning UBS into a European champion moved the entire Swiss financial center last fall: for weeks, there was speculation about a merger between UBS and local rival Credit Suisse (CS) after news leaked out about an internal bank strategy paper under the code name of «Signal».
It was known from media reports that UBS had previously also put out feelers to nearby countries, such as Deutsche Bank. In response to the headlines, bank president Weber rowed back – and then scuttled the plans altogether, as was also reported by finews.com.
Liquidity Issues
On the occasion of the presentation of the 2020 results today, Ralph Hamers (pictured below) spoke out on the subject – he addressed the public for the first time as head of Switzerland's largest bank. The Dutchman spoke plainly to journalists. Cross-border bank mergers in Europe are not so easy, he warned.
It is true that the European Central Bank now has an authority that presides over the market as a whole and is in favor of mergers. But that is not enough, he said, adding that individual country markets are still very different and compartmentalized by regulation. Those who buy across borders run the risk of blocking capital and liquidity in individual states, Hamers added. This, while the opportunities for cost savings are often finite, the Dutchman said.
In the Footsteps of Sergio Ermotti?
Hamers, therefore, gives priority to organic growth through more customers and new money. Acquisitions will be looked at on a case-by-case basis, but only if they help to better achieve the goals in existing lines of business. According to the UBS CEO, such transactions currently only make sense in asset management and the fund business. In doing so, he is apparently following the thinking of his predecessor, Sergio Ermotti, during whose ten-year tenure the big bank implemented only a handful of deals, with a focus on private banking.
As a result, UBS seems to be saying goodbye to the (highly speculative) merger merry-go-round in European banking for the time being. Chairman Weber had recently announced that the big bank was in a transitional phase anyway and would therefore not make any major acquisitions; Weber himself will leave the institute in 2022, while CEO Hamers must first familiarize himself with the Swiss banking giant.
The Dutchman is likely to welcome that – he has had an «incredibly intense» two months of induction at UBS, he said on Tuesday.
Full Focus on UBS
Hamers also went out of his way to calm tempers on a second thorny issue for Weber: the UBS board of directors had chosen the ex-ING chief as Ermotti's successor in the full knowledge that the latter had to deal with a money-laundering affair in his last batch. The case now threatens to catch up with Hamers after prosecutors in the Netherlands launched criminal investigations against Hamers – putting Weber's succession plan for the UBS chief post in jeopardy.
Speaking to the press, the CEO now said he was confident that these proceedings would also come to a good end. The public prosecutor's office had already concluded twice before that he was not to blame. He had always acted in good faith and cooperated fully with the authorities. Moreover, he now knows the case very well and feels well represented. «You can be rest assured that I am fully focused on my work as CEO of UBS,» Hamers told Swiss broadcaster «SRF» in an interview.
