The mammoth integration of failed financial institution Credit score Suisse into its former rival UBS will act as a “case research,” UBS CEO Sergio Ermotti mentioned Friday, one that can present that massive financial institution mergers must be allowed.
“It’ll be a case research to be evaluated globally, but in addition significantly in Europe, the place ultimately the need of making stronger banks, and stronger and extra aggressive banks from a world standpoint of view, is in my perspective a necessity,” Ermotti instructed 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 mentioned.
“It is good to have sturdy gamers that may be a part of the answer, like UBS was within the Credit score Suisse case. … Nevertheless it can’t be simply that half. So in that sense, I feel that the true problem is, there needs to be a political want to facilitate one thing like that. So it isn’t the fact of at the moment,” he added.
Credit score Suisse collapsed in March 2023 after years of underperformance, scandals and danger 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 mentioned the dimensions of the brand new entity flags potential competitors points that can should be monitored.
Ermotti mentioned Friday, “The excellent news is that, for my part, in lots of international locations, there’s a recognition that they need to shield their banks or monetary establishments as nationwide champions, which is an implied or express recognition of their worth for his or her economies.”
“However the unhealthy information is that they do not notice that to be able to actually be significant, and go to the subsequent stage of their contribution of their economies, they are going to should be additionally extra aggressive globally. However with out a banking union, with out a capital markets union, it’ll be very, very tough for Europe to compete with U.S. massive banks.”
In contrast to within the U.S., European economies proceed to depend on the banking sector for enterprise financing; and Europe has a “utterly completely different taking part in area and an absence of important mass,” Ermotti mentioned.
“So I hope, I am not so satisfied it’ll occur quickly, however I hope ultimately at some point these sorts of mergers between massive banks will probably be allowed and we are able to contribute to that by exhibiting that it is attainable. Within the meantime, I feel that in lots of international locations, important mass and synergies will be created by additional rounds of native mergers,” he mentioned.