With the new UBS, a bank is emerging that can no longer take personal sensitivities into account. It's the beginning of a new form of banking that's catching on in the US.
When Citi CEO Jane Fraser recently announced a far-reaching reorganization of the US financial group, she used unusually harsh language. The planned adjustment of management structures would involve enormous job cuts «uncomfortable» for everyone, said Fraser, who is the only woman leading a major Wall Street bank. She urged her staff to get behind her «or get off the train.»
Citi CEO Jane Fraser (Image: Citi)
Restructuring is not uncommon in US finance, but the tone of this latest announcement unmistakably heralds an escalation of relentlessness in communications. «She realizes that if she doesn’t get their costs in line with the rest of their competitors this is an existential crisis for Citi» Christopher Whalen, a banking veteran and CEO of Whalen Global Advisors, tells «Financial Times» (behind paywall).
Harsh Words
The harsh choice of words underscores the urgency of the undertaking in which there's only one chance left to save an institution. This new reality in banking is making itself felt in Switzerland. In recent months, UBS CEO Sergio Ermotti made several blunt statements regarding the restructuring and relaunch of the country's largest bank.
UBS CEO Sergio Ermotti (Image: UBS)
Early in his second stint as UBS CEO, he said the deal to take over Credit Suisse was a takeover and not a merger, the latter being the preferred nomenclature of the Federal Council and the authorities. That makes it clear who's calling the shots, and that UBS was pushed into the deal.
Last Chance for Switzerland
The UBS boss stressed the integration pace will remain high, and has to proceed quickly because time for analysis is limited. This also aims to nip any discussion about job cuts in the bud. In recent comments to the media, he also said there's no time for nostalgia.
Such statements are reminiscent of those made by Fraser. Both make it clear the international banking industry has entered a new reality that no longer considers sensitivities not directly counting towards the successful running of an institution. For UBS it's the last chance to preserve Switzerland as an important point on the map of the world's leading financial centers and to have a high-performance bank that can play in global competition. In the final analysis, it's crucial for the future prosperity of Switzerland.
No False Consideration
Ermotti knows he cannot afford to make any major mistakes on his mission, because ultimately the biggest economic policy experiment in Switzerland in many decades depends on him. He, like Fraser, must strategically set UBS on the road to success without false consideration.
To do this, he has to be able to call on the best people without compromise. That sometimes involves tough decisions and a consistency that doesn't always suit everyone. In the end, what counts in today's reality is not an egalitarian approach, but a transparent management record.
Decades of Blanket Failure
It used to be different. Developments over the past twenty years have shown that it led to a blanket failure in Swiss banking internationally, often ending up before the courts with heavy fines and a huge loss of reputation, and can probably only be corrected once. And that time is now.
This is the new reality in banking.
