UBS Group CEO Sergio Ermotti has said that it will take several months before Switzerland adopts new banking rules to prevent bank runs and ensure financial stability. He also said that he did not expect the new rules to put the country at a disadvantage compared to other jurisdictions.
New rules to prevent bank runs
The new rules are part of a review of the Swiss financial regulation that was triggered by the near-collapse of Credit Suisse in March 2023. The Swiss government had to engineer an emergency takeover of Credit Suisse by UBS to avoid a systemic crisis that could have rocked the global financial system.
One of the options being discussed is to impose some limits on withdrawals and fees on exits for depositors who want to move their money out of a bank in a crisis situation. This is intended to discourage panic withdrawals and reduce the risk of liquidity shortages.
However, Ermotti said that he did not believe that such measures would be part of the final package of reforms. He said that even the Swiss finance minister, Karin Keller-Sutter, had taken an official stance against this idea. He added that he was confident that Switzerland would maintain its high standards of banking regulation and supervision.
UBS to integrate Credit Suisse
Ermotti also said that he was ready to lead the integration of Credit Suisse into UBS, which is expected to be a complex and risky task. He said that he would focus on aligning the risk culture and the business model of the two banks, while preserving the core strengths and value of Credit Suisse.
Ermotti, who was UBS CEO from 2011 to 2020, is credited with successfully overhauling the bank after its bailout during the 2008 financial crisis. He reduced the size and risk of the investment bank and restored the trust and reputation of the bank among clients and stakeholders.
He was brought back as CEO on April 5, 2023, replacing Ralph Hamers, who had agreed to step down to serve the interests of the new combination, the Swiss financial sector and the country. Hamers had been in the role for only two and a half years, during which he had delivered record results for UBS.
UBS reports strong third-quarter results
UBS also reported strong third-quarter results on Wednesday, beating analysts’ expectations. The bank posted a net profit of $2.6 billion, up 23% from the same period last year. The bank attributed the growth to higher revenues from its wealth management, asset management and investment banking divisions.
The bank also said that it had increased its capital ratio to 14.9%, well above the regulatory requirement of 12.4%. The bank said that it was confident about its outlook for the fourth quarter and the full year, despite the uncertainties and challenges posed by the Covid-19 pandemic and the geopolitical tensions.
