Mr. Ermotti led UBS for nine years until 2020 and is credited with restoring the bank to health after a government bailout in 2008. He will succeed current CEO
Ralph Hamers,
who has run the bank for the past three years, on April 5.
“We felt we had a better horse” in Mr. Ermotti, said UBS Chairman
Colm Kelleher,
explaining the bank’s decision to replace Mr. Hamers.
With the return of Mr. Ermotti, UBS will have two experienced fix-it bankers at the helm. Mr. Kelleher spent three decades at
and guided it through the global financial crisis as its chief financial officer. He later helped reorient Morgan Stanley’s business away from riskier investment banking to more stable wealth management. He retired in 2019 as its No. 2 and joined UBS last year.
Mr. Ermotti will reprise a role he executed last decade when he slashed thousands of jobs and shut down much of UBS’s investment-banking operations. He will now take on the task of doing the same with Credit Suisse while integrating the large parts of the two banks’ businesses that overlap. These include wealth management, asset management and Swiss retail banks.
Mr. Ermotti, currently chairman of reinsurance giant
Swiss Re AG
, will step down from that role. He will maintain his position as lead independent director on the board of fashion group
Mr. Ermotti is Swiss-born while Mr. Hamers hails from the Netherlands. The return of a Swiss national to the helm might help reassure the bank’s substantial domestic customer base and politicians in the country who have bristled at the reputational damage caused by Credit Suisse’s downfall.
Mr. Kelleher said replacing Mr. Hamers shouldn’t be seen as a Swiss solution, although he and Mr. Hamers said that rehiring Mr. Ermotti would serve Switzerland’s interests.
UBS agreed to take over Credit Suisse earlier this month for $3.2 billion. The acquisition, pushed by Swiss regulators, sought to avert further damage to the banking system.
The deal combines two sprawling financial institutions that competed against each other for decades. It puts UBS in charge of running down Credit Suisse’s huge trading positions and laying off its executives and staff. The takeover is the first time two institutions deemed by international regulators as systemically important have been combined since the global financial crisis.
Credit Suisse is Switzerland’s No. 2 bank by assets, after UBS. Through the acquisition, UBS will double its market share in the country and in some other activities. Swiss regulators granted a yearslong waiver to UBS on the additional capital the combined bank will need. The combined group would have around 125,000 employees across the world, although tens of thousands of jobs will go, UBS has indicated.
Mr. Ermotti said UBS needs to “thoughtfully and systematically assess all options.”
Mr. Kelleher said the plan will be to reduce most of Credit Suisse’s investment bank and to make the overall investment bank at UBS even smaller than before the acquisition. Credit Suisse’s large investment bank was the root of many of the problems leading to its downfall, including trading portfolios that Credit Suisse had estimated would take years to unwind.
UBS’s strategy before the takeover had been to keep and attract the world’s rich and do more banking business in the U.S. It had said it wasn’t considering any large acquisitions. Mr. Kelleher has said he never wanted the call from Swiss authorities to buy Credit Suisse, but that it presented an opportunity, too.
“Hopefully what we’re doing is the right thing and I think we’ve got the right team assembled,” Mr. Kelleher said Wednesday. “We need to explain our story to all our stakeholders and explain why this is a great deal, if it’s executed properly, but it comes with risks.”
Mr. Kelleher said he appreciated Mr. Hamers’s “understanding of the current situation and willingness to step down.”
Analysts and investors have said the combination could be powerful in terms of generating revenue, but will take years to carry out. The two Swiss banks both manage the wealth of billionaires, royalty and ultrarich families, and have Wall Street investment banks, in addition to lending at home. The knock-on effects for UBS from the purchase, such as customers diversifying by moving their money elsewhere, are far from clear.
UBS shares rose around 1.5% on Wednesday and are around 5% above where they traded before the deal.
Mr. Hamers took over from Mr. Ermotti in November 2020. He was previously CEO at Dutch bank
NV, which he helped restructure. He got rare kudos in banking from Silicon Valley bosses for scaling up an asset-light business with automation.
He brought a different vibe to UBS, introducing agile working and other buzzword practices while also recognizing the lender needed to upgrade how it interacted with customers digitally.
He wore T-shirts to talk to clients about the future of digital banking and was known for wearing orange sneakers at ING, that bank’s signature color.
UBS said it would try to reach more mainstream wealthy customers in the U.S., and had planned to buy digital wealth adviser Wealthfront before backtracking on the deal last year.
Mr. Hamers signaled a change in culture to staff from the tenure of Mr. Ermotti, the quintessential well-dressed Swiss businessman. Mr. Hamers pushed against UBS’s traditional ways after having itself formed from earlier bank mergers with layers of management.
Write to Margot Patrick at margot.patrick@wsj.com and Serena Ng at Serena.Ng@wsj.com
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