Sergio Ermotti returns to UBS to steer Credit Suisse takeover

UBS Group has rehired former chief executive Sergio Ermotti as it looks to manage its vast takeover of rival Credit Suisse.

The board said the decision to rehire Ermotti, chief executive between 2011 and 2020 and current chair of Swiss Re, had been taken "in light of UBS’s new priorities". It noted that Ermotti had "successfully repositioned" UBS following the 2007-08 financial crisis, helping to build "financial strength and improved resilience".

It continued: "This unique experience, together with his deep understanding of the financial services industry in Switzerland and globally, makes [him] ideally placed to pursue the integration of Credit Suisse."

Current chief executive Ralph Hamers had agreed to step down "to serve the interests of the new combination, the Swiss financial sector and the country", UBS added.

UBS acquired the embattled lender earlier this month in a $3.25bn deal brokered by the Swiss authorities. The shotgun deal was designed to prevent Credit Suisse from collapsing.

The two Zurich-based lenders have between them $1.6trn in assets and more than 120,000 staff, and the integration will be complex. Hamers does not have any significant mergers and acquisition experience, Reuters noted.

Hamers said on Wednesday: "I am of course sorry to leave UBS, but circumstances have changed in ways that none of us expected."

UBS chair Colm Kelleher said: "Ralph has been an outstanding chief executive, driving the group to unprecedent success despite a challenging environment.

"While the [Credit Suisse] acquisition will support UBS’s existing strategy, it imposes new priorities on us. With his unique experience, I am very confident Sergio will deliver the successful integration that is so essential for the banks’ clients, employees and investors."

Ermotti said: "The task at hand is an urgent and challenging one. We need to thoughtfully and systemically assess all options."

Ermotti rejoins on 5 April, with Hamers staying on as an adviser during a transition period.

Victoria Scholar, head of investment at Interactive Investor, said: "Having steered UBS through the aftermath of the financial crisis, and a rogue trading scandal, Ermotti is a dab-hand at crisis management.

"He will have the immediate challenges of cutting staff, reducing Credit Suisse’s investment bank, finding other synergies between the two lenders and convincing shareholders about the prospects for the arranged marriage."

Credit Suisse has endured a torrid few years leading up to its collapse, including being caught up in the Greensill and Archegos scandals. Earlier this year, it posted its largest annual loss since the 2008 financial crisis and warned of further "substantial" losses to come.

The crisis worsened, however, after the lender confirmed "material weaknesses" had been identified in its internal controls, and leading shareholder Saudi National Bank ruled out providing fresh capital, sending the share price plummeting and forcing the Swiss authorities to step in.