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 mentioned Friday, one that can present that massive financial institution mergers needs to be allowed.
“It will 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 viewpoint a necessity,” Ermotti instructed CNBC’s Steve Sedgwick at an occasion on the Ambrosetti Spring Discussion board in Italy.
“In fact, we won’t 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. … However it can’t be simply that half. So in that sense, I believe that the true situation is, there needs to be a political want to facilitate one thing like that. So it isn’t the truth of as we speak,” 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, in my opinion, in lots of nations, there’s a recognition that they need to defend 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 dangerous information is that they do not notice that so as to actually be significant, and go to the subsequent degree of their contribution of their economies, they are going to should be additionally extra aggressive globally. However with no banking union, with no capital markets union, it should be very, very troublesome 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 “fully totally different taking part in discipline and an absence of important mass,” Ermotti mentioned.
“So I hope, I am not so satisfied it should occur quickly, however I hope finally in the future these sorts of mergers between massive banks might be allowed and we are able to contribute to that by displaying that it is attainable. Within the meantime, I believe that in lots of nations, important mass and synergies will be created by additional rounds of native mergers,” he mentioned.
