Switzerland: UBS about to be bought? Sergio Ermotti skeptical

Outgoing CEO of UBS, Sergio Ermotti doubts that the number one Swiss bank could represent a candidate for a takeover by a competitor, even though the establishment has a relatively low market capitalization. “Not impossible”, a recovery “is not so simple,” said the Ticino.

On the one hand, we must take into account the regulations and legal requirements in force in different countries, explains Sergio Ermotti in an interview published this Friday in the Neue Zürcher Zeitung (NZZ). On the other hand, Switzerland represents a competitive advantage, and foreign competitors know it too, adds the managing director of UBS, who will step down next week.

“But of course nothing can be ruled out,” he continued. Ultimately, however, there aren’t many banks that have the financial backing to take over a facility like UBS. “We are highly rated compared to other banks.”

According to Sergio Ermotti, an attempt to split up one of the big banks and buy out parts of it would also be “much more dangerous” than a takeover. The option that only Swiss companies remain and that the others are lost would be “much more dangerous” for the financial center.

Sergio Ermotti declined to comment on rumors of a possible merger with neighbor and competitor Credit Suisse or with Germany’s largest bank, Deutsche Bank. “The point is, UBS can exist on its own.”

But the board and management must constantly contemplate scenarios of how their business might develop and imagine where it stands should competitors come together. “Everyone does this, including us.” But takeovers and mergers happen in all sectors of the economy, so why should it be any different in the banking sector, asked Sergio Ermotti.

In general, it is obvious that the European banking system suffers from significant overcapacity and is far too fragmented. Alongside the “too big to fail” principle (too big to fail, in reference to systemically important banks, editor’s note), we can also mention those of “too small to compete” and “too small to survive” (too small to be competitive and too small to survive, editor’s note), adds Sergio Ermotti .

Regulators should have already realized this and “something is going to happen”, continues the one who heads UBS since 2011. Asked whether Switzerland would still have two large banks in ten years, Sergio Ermotti believes that ” the chances are good ”. “But to do this, the Swiss financial center must maintain its competitiveness”.

If Sergio Ermotti does not say he is opposed to strict and credible regulation, Ticino does not want a more consistent regulatory system, “de facto counterproductive” and seriously harmful to competitiveness at the international level if it is specific to Switzerland.