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 large financial institution mergers needs to be allowed.
“It should be a case research to be evaluated globally, but additionally notably 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 perspective a necessity,” Ermotti informed CNBC’s Steve Sedgwick at an occasion on the Ambrosetti Spring Discussion board in Italy.
“After all, 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. … But it surely can’t be simply that half. So in that sense, I feel that the actual difficulty is, there needs to be a political need to facilitate one thing like that. So it isn’t the fact of right now,” 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 scale 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 unhealthy information is that they do not understand that with the intention to actually be significant, and go to the following stage of their contribution of their economies, they may should be additionally extra aggressive globally. However and not using a banking union, and not using a capital markets union, it will 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 “fully totally different taking part in subject and a scarcity of important mass,” Ermotti mentioned.
“So I hope, I am not so satisfied it will 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 displaying that it is potential. Within the meantime, I feel that in lots of nations, important mass and synergies will be created by additional rounds of native mergers,” he mentioned.
