UBS CEO says integrating Credit Suisse will become a ‘case study’ for future big bank mergers

The mammoth integration of failed financial institution Credit score Suisse into its former rival UBS will act as a “case examine,” UBS CEO Sergio Ermotti stated Friday, one that may present that large financial institution mergers needs to be allowed.

“It’ll be a case examine to be evaluated globally, but in addition significantly in Europe, the place finally the need of making stronger banks, and stronger and extra aggressive banks from a world standpoint of view, is in my standpoint a necessity,” Ermotti advised CNBC’s Steve Sedgwick at an occasion on the Ambrosetti Spring Discussion board in Italy.

“In fact, we will not simply depend on a disaster to create or facilitate the merger of banks,” Ermotti stated.

“It is good to have sturdy gamers that may be a part of the answer, like UBS was within the Credit score Suisse case. … But it surely can’t be simply that half. So in that sense, I feel that the actual subject is, there needs to be a political want to facilitate one thing like that. So it isn’t the truth of immediately,” he added.

Credit score Suisse collapsed in March 2023 after years of underperformance, scandals and threat administration crises. UBS in June accomplished its takeover of the 167-year-old financial institution in a deal controversially brokered by Swiss authorities.

The Swiss Nationwide Financial institution has stated the dimensions of the brand new entity flags potential competitors points that may must be monitored.

Ermotti stated Friday, “The excellent news is that, for my part, in lots of international locations, there’s a recognition that they wish to defend their banks or monetary establishments as nationwide champions, which is an implied or specific recognition of their worth for his or her economies.”

“However the unhealthy information is that they do not understand that with the intention to actually be significant, and go to the subsequent degree of their contribution of their economies, they are going to must be additionally extra aggressive globally. However with no banking union, with no capital markets union, it is going to be very, very troublesome for Europe to compete with U.S. giant banks.”

Not like within the U.S., European economies proceed to depend on the banking sector for enterprise financing; and Europe has a “fully totally different enjoying discipline and an absence of vital mass,” Ermotti stated.

“So I hope, I am not so satisfied it is going to occur quickly, however I hope finally in the future these sorts of mergers between large banks will likely be allowed and we will contribute to that by exhibiting that it is doable. Within the meantime, I feel that in lots of international locations, vital mass and synergies could be created by additional rounds of native mergers,” he stated.