UBS boss Sergio Ermotti on CS case: “We don’t need more expensive equity capital”

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Troubled Credit Suisse could be liquidated “without a loss of a franc for clients and taxpayers”, according to UBS boss Sergio Ermotti, 63. But in an interview with the Neue Zürcher Zeitung, he said the financial centre’s reputational damage would be much greater than its takeover by UBS in March.

Of course, a takeover is a better solution, Ermotti said. “Liquidating a major bank just to confirm this If it worked, it would be pure masochism.” The UBS CEO emphasized that no one knows what kind of shock this will cause and that many more jobs will certainly be lost.

But the blame for CS’s collapse does not lie with the employees: “Most of CS’s employees are good, professional people who want to be successful for clients and the bank. You won’t have any problems at UBS,” says Ermotti.

In an interview with newspaper “Le Matin Dimanche” published on Sunday, the UBS boss emphasized that the 3,000 layoffs do not only affect CS employees. “We will do our best according to the principle of merit,” Ermotti said. Performance should also be taken into consideration.

Crisis was managed well

Ermotti describes the CS crisis as an event that was separate from the rest of the industry and “evolved over many years.” Nobody wanted the collapse of CS, especially the way it happened. “But I don’t know of any other country that can overcome such a crisis in 72 hours like Switzerland.”

If you want to prevent such crises, you need regulations to ensure that risks are handled appropriately. “If we had regularly published the results of stress tests in Switzerland, the problems of CS would probably have been revealed sooner.” And supervisory authorities would have to be given more sensible parameters that would allow them to intervene in a timely manner.

No more equality

In most cases, it’s not just about skills, but reliability, Ermotti said. UBS also has a strong interest in Finma, a powerful financial market supervisor, but “strong” does not mean more regulation, but rather “targeted optimization of framework conditions and smart rules and minds.”

The UBS boss said he could not accept Ermotti’s demands for higher equality: such demands were pure populism. «CS had sufficient equality. No need for more expensive equity capital. More capital would be costly to the entire economy.” (SDA/kae)

Source :Blick