Two Years After Credit Suisse: Sergio Ermotti’s Call to UBS Employees
Soccer is a passion for UBS CEO Sergio Ermotti. In an open letter, he urges employees to do everything in their power to keep Switzerland’s financial center in the Champions League.
Two years after the Credit Suisse rescue, UBS-Group CEO Sergio Ermotti reflects in an open letter to UBS employees on the integration process and the ongoing regulatory debate in Switzerland.
He emphasizes that UBS’s acquisition was crucial to stabilizing the financial sector. While a resolution of Credit Suisse would have been theoretically possible, it would have posed significant risks to the financial system. «Had UBS not taken over Credit Suisse, shareholders and AT1 bondholders would have taken losses first, followed by subordinated TLAC instrument holders with CHF 48 billion at stake. However, taxpayers would have been protected,» he asserts.
Enforcing Existing Rules Matters
Ermotti criticizes the political discourse surrounding new banking regulations. The notion that UBS is «too big to fail» is flawed, he argues – Credit Suisse, after all, did fail. Swiss capital requirements are already stringent, but they must be effectively enforced, which was not the case with Credit Suisse.
«It makes no sense to discuss new regulations without first understanding why existing rules were not applied. Let’s be honest: We don’t change the laws for everyone whenever a single individual breaks them. Instead, we ask: How did this happen? Where was the oversight? This case is no different,» he stated.
UBS was part of the solution but bears substantial costs for the acquisition. Ermotti stresses that UBS does not benefit from an implicit state guarantee; on the contrary, it incurs high funding costs. He cautions against excessive regulation, stating that overregulation could have far-reaching consequences beyond the affected bank’s balance sheet.
He also highlights that Switzerland implemented the latest round of Basel III regulations earlier and more comprehensively than the EU, the UK, and the US – where the trend has been toward loosening rather than tightening regulations. «Currently, we hold around 10% more capital than our international peers for the same level of risk, which already puts us and the Swiss economy at a competitive disadvantage,» Ermotti explains.
A Draw Is Not Enough
Ermotti advocates for targeted, proportionate, and internationally aligned reforms. Clear accountability at the management level, transparent stress testing, and a strengthened financial regulator (FINMA) are essential. He also calls for an enhanced role for the Swiss National Bank as a «Lender of Last Resort» to ensure orderly resolution in the event of a crisis.
Drawing a parallel to elite European club soccer, Ermotti compares the current regulatory debate to the Champions League. «In Switzerland, we often see a draw or a compromise as an acceptable outcome. But that’s not always the right approach,» he stresses.
Finally, he rallies UBS employees: «Now we must work to ensure that Switzerland’s economy, financial center, and country as a whole remain in the Champions League—for the benefit of future generations. This requires a ‘Team Switzerland’ mentality – working together for our nation.»
