today we are very excited to welcome one of the most impressive leaders in global Finance, Sergio Ermotti, CEO of UBS, which is one of the biggest banks in the world.

Sergio led UBS from 2011 until 2020, but he recently made a dramatic return after the historic acquisition of the main rival Credit Suisse.

But first, Sergio will go all the way back and talk about when you were even younger, you were a talented football player, so how come you ended up in banking?

Then, but then I in Switzerland, you know, we we could go through, you know, an education system that allows you to go through an apprenticeship, so I started in banking as a plan B, you know, to the football career.

And so when it turned out that I wasn't good enough to be a football player or a professional one at least, then I opted for becoming being a Trader, and so my career in banking started.

Yeah, well, I would argue you've got you've scored quite a lot of goals, but it's just that it's being in finance rather than football, but what happened, you got a very important position, you were only 27 years old, yeah, that was probably the defining one of the defining moments in my career.

Because back then I went through an apprenticeship, I stayed in Lugano, the south of Switzerland, and I I did a master in in banking, and then I was hired by City Bank to be a Trader for convertible bonds and options and and so on.

And I did it for 18 months, and then I got the the famous offer you can't refuse from from from uh from Mar Lynch, which was not necessarily Financial, was the ability or the opportunity to to build up their Swiss frank Capital Market operation in Switzerland.

1987, so basically from scratch, was almost no office, no no telephone, so and me and another two or three colleagues, you know, myself as one of the the two leader took on the embarking to this journey of building from scratch at the Swis Frank operation.

That eventually got bigger, we went to the stock exchange, we got a banking license, and that was a a fantastic Journey, so I was training during the day in the evening sorting out, you know, how to manage the back office and how to manage the entire operation, something totally Unthinkable today.

And that was a defining experience because I I I I learn how to manage how to build up a business, how to you know, look at different ways of being you know, a leader and and still being.

Why would that be Unthinkable today? Because today I would say the regulatory environment is completely different, governance around large organizations is completely different.

So giving a to a 27 years old person a mandate to build up such a business was a probably yeah, I think is Unthinkable today, most likely, yeah.

Fast forward to 19th of March, 2023, when UBS agreed to buy Credit Swiss, there was a big big turbulence in the market in the week up to this, now what did you what did you think well, seeing this from the sideline in a way at that stage?

Yeah, some kind of interested because I I I even back then I was a a chair of swissy and but also the facto as a as a banker or a former Banker, I felt you know, very sorry for seeing that, you know, situation developing and and and and but I I have to say that I never thought that it would hand so dramatically right over.

You know, of course, you know, until Wednesday the Wednesday before the weekend there that day when I heard that the Swiss fed Council was in an emergency U um session that I understand I understood that something must be pretty bad, and actually I knew that the weekend would turn out into something so almost impossible that they make such announcements on special sessions of the federal Council without something meaningful coming and there.

So I uh but I I have to say that the the speed at which things developed was was uh somehow tragic and and surprising.

Now this was in a way the biggest fault since Lon Brothers, right, so how shocked were you?

To be fair, I think that we recognize I recognize for many years that maybe C.S. didn't have a sustainable business model, and in that sense, I was surprised that they waited for so long to take a radical decision.

And as time went by, particularly after their Capital increase in in in in October that didn't really, you know, go through well with investors, not only in terms of the placement of the stocks, but you know, the strategy, I I thought that they would try to find a buyer or to do a break up or do something's radical.

So basically to let that external factors like the regional banking crisis would force them somehow to you know, to to have to take actions was a little bit surprising, and but you know, I think it was the bank and and and potentially even other actors, I mean, they were probably not on top of the situation for for too long.

I think Switzerland did a pretty good job during the weekend to avoid a Leeman alike crisis, because I think that one has to also put into the context that at least the lessons learned from the financial crisis has created uh plans Capital buffers and that would not translate into a an impossible mission for a private solution to happen.

And also, which is our Theory, and that is proven a wind down of credit swis would have not costed the taxpayer any money, but of course, he would have created a lot of turmoils and uncertainties in the market, because the question would have been very quickly, was next, right?

So so what happens during a weekend like that? I mean, this is not an ordinary weekend, I mean, what happens in a country who yeah, but for me, you know, I'm I was I was still a half Observer absolutely, but you were still you, I mean, UBS is a is a is a very significant power in the financial industry, yeah, but in in a weekend like that where everybody gets together to solve a crisis, what is what is happening specifically, yeah, it was interesting because uh yeah, from Wednesday onward, I started to get phone calls from you know, former colleagues or or competitors of the banks right, the banks, uh from people in the industry actually asking me what I thought about the situation.

We were of course debating And discussing, and then uh during the weekend, you know, I I also got uh some phone calls um um in during the process, but I not from the UBS part, but uh as a you know, there was a a consideration about developing uh other plans.

So uh so I was somehow during the weekend prepar that something would would happen, and yeah, I think that's what you what you saw is that the facto uh uh very rapidly uh the private Solutions developing as the most viable one, the one that would create certainty developing.

And so uh I have to say that Sunday afternoon when I heard that UBS was uh basically chosen as the solution, I was somehow relieved because I felt that you know, having a public uh uh solution would have been quite damaging uh not the right thing to do.

And uh so and then things uh stayed quiet for few hours until Monday morning, and then I got a phone call from from the German from the German, yeah, and what did he say, yeah, I said that we we uh he told me we need to talk.

Uh and so I suspected was not probably just having a beer or just asking my uh advice, it could have been because we but uh then we decided to meet on Tuesday, and uh and after a few minutes, it got pretty clear on the reason for for the meeting.

What did you think, well, of course, I was uh you know, on one end, uh I felt like uh yeah, the Temptation uh was a sense of uh of loyalty to UBS uh kind of Call of Duty also to the to the country, uh you know, I was I felt honored that people were thinking about me.

On the other hand, you know, I had to find my own motivation, so and uh my own motivation that I thought and I still believe today that you know, out of something that is definitely not ideal and quite tragic, we can do something great, and eventually something that can create longlasting value for for shareholders, but also for clients and employees of the of because.

You know, on one end, you know, may for many of the credit Swiss employees was an Agony in the last few years, and I think that for the UBS employees, we now have a even stronger competitive position, uh more Diversified business, our clients will benefit, and I do think also shareholders will benefit over time.

So I felt okay, there is we think so too, by the way, yes, good, but there there was also a motivation for me to do something that was quite transformational, and uh for the industry, and uh and therefore um so I got a good motivation, so it took me 48 hours to to think about.

Who did you speak to, who do you take advice from, well, the I I think I I spoke to my wife, uh but after a few seconds, she told me, but it looks like you're looking at my face, she thought she felt I already decided as I was talking to her, but uh no, honestly, I I uh I a couple of friends, uh I spoke to, uh but uh you know, I have to say that none of them told me don't do it, everybody was quite uh convinced that I should should follow m.

But you you had been very successful at UBS, and now going back and taking on something which is you know, in part risky, right, what did you what did you think about that?

You know, that was probably the the really deciding uh moment because I made a very simple analysis, the reason I mentioned to you this the the the sense of uh duty to UBS uh uh and and and and to Switzerland played a role in making me feel like if I say no, and things don't turn out well, not that I think I can resolve every problem to be honest, but I would feel somehow Corr responsible for not not having the guts or being egoistic about not doing it for whatever my own reasons, right?

And this sense of Duty for your country, where does that come from, you think, probably because we as the southern part of Switzerland, the Italian part of Switzerland is a minority.

So it's probably also the first time that somebody from the south of Switzerland has such a important uh position, I don't know, I don't know, is a good question, I I do believe that there is I love this, but I do believe there has to be some kind of uh sense of standing and demonstrating uh to the rest of the country that that we we can we are also.

Yeah, no, no, no, no, I did it because I believe, no, I I mean, fundamentally, I think Switzerland is a is living out of diversity between cultural diversity, the German 23 of Switzerland, we are only 300,000 people out of uh eight and a half n million people, so definitely a minority, but uh but still the with the French people, we have a very cohesive way of looking at it.

Well, first of all, I have to say that it was quite surreal how things developed so quickly, I found myself into into into my office, uh old office within a week, uh in the bank within 48 hours, or you know, basically we announced it on the 29th of March, so basically the next morning I was in the bank.

And uh and uh it it was so intense that I had to focus on the priorities, the priority was okay, what what do we need to do to stabilize uh uh the clients, what do we need to do to stabilize the employees, what needs to be done to to to really start to you know, uh develop uh the integration plan, what are the priorities?

Uh I had to start to consider okay, with the team that is going to uh be with me, uh and and and one of the first priority for me from the very beginning was okay, I need to fully understand what kind of risk we took on, what is the liquidity position of the company Bank, not only for risk management.

But because my first priority, I told the board, was we need to repay as quickly as we can the emergency liquidity support of the government, and we need to return the guarantee on the portfolio that was uh uh selected as a potentially problematic, uh as soon as possible, and that was my number one priority.

And why is that so important to pay that by quickly? Because that was in my point of view, once we would determine that we have the strength and the ability to absorb any of the excess risk that we uh would find, and then we are in control of that, that would be the ultimate way to reassure um our stakeholders, clients, and in general, you know, our employees and and and the rest of of the community in which we operate.

So the ability to say, okay, we took over, we are in control, we can do it with our own Capital, our own liquidity, for me, was the the ultimate thing that we were comfortable about our due diligence.

So it took uh uh three four months to do that, right, so to to to to come, but for me, was almost very clear from the very beginning after a couple a couple of three four weeks, I you know, I realized that we we would have a good chance to to do that.

You said that it was clear to you that credit F didn't have a sustainable business model, what do you how could you see that, what what do you mean by that, in a very easy way, it's very simple, there is nothing more dangerous than a large bank or a bank not making money or losing money.

That should be in mind, there is no Capital, no liquidity, no no matter what do you think if you have a bank that is either not covering its cost of capital or even worse losing money, then you know that something is wrong.

But in in in in essence for me, when you have a a a a Wealth Management Center business an asset Gathering, let's call it right Centric business with a strong position in the Universal banking Market in Switzerland, if you are not able to pay for your cost of capital, then you know there is a problem, and that was the case.

But what was the problem? I mean, why were they not making money? Because they were allocating too much Capital to the Investment Bank, yeah, below and with returns below their cost of equity.

And uh because they were still relying too much on taking uh or or using credit uh as a lever to go into business relationship including wealth management, which is not bad for per se, but you know, if you are a wealth management or an asset Gathering Centric organization, Landing is a tool that you give to clients, you know, to comp Le your offering is not the tool that you get in order to get into business.

And and and you know, Cru is very strong, c as very good people, very good products, very good capabilities, and was seen over the last uh centuries and the last decades as a entrepreneurial bank, so but in a sense, it become way too entrepreneurial, and way too risk-taking in order to accommodate clients that over time it lost completely the disciplines on risk reward and return on Capital.

What was the moral like, what was the moral like in the workforce there when you took over, definitely a lot of disappointment, a lot of angry people, a lot of a lot of people that were you know, for different reason, you know, the one that uh that they were absolutely not uh comfortable with losing their identity as as an organization, the one that were totally pissed off because they lost a lot of their money uh in different, you know, uh and uh and so on and so forth, so the one that were absolutely uh uncomfortable with the idea now all of a sudden to be in the same house as the one they've been fighting at for for years and years.

So was a mix, I think it's probably difficult to imagine from the outside because you've been competing for how many years, I mean, crit with and uh and 170 years, 170 years, right, on on one on each Corner in every town in Switzerland, right, yeah, and then suddenly you are going to be friends and family, yeah, it's not it's not yeah, but my analogy I'm telling to people is to say fine, we we have been fighting to for for the national championships, now we are the Swiss national team, and we need to play for the bigger games, and therefore that's a new Mission.

So I mean, uh I mean, the reason we thought Al so attractive the situation is because it's a kind of merger you can never do in peace time, but look in banking, all the mergers that creates any value are coming at moments of stress, yeah, look back at US Banks, you look back how they got now into their position, it's all about them being allowed or being asked during the financial crisis to grab or put together banks that were about to fail or they were failing and so on and so forth.

So so and financial crisis, they come every so often, so it's the waiting game, right, yeah, so the issue is that it's a Pity that it takes a crisis to create something that makes sense, but that's a reality.

By the way, you know, that a lot of m& fails not because the industrial logic is not there, not because the financial logic is not there, not because blah blah blah, but because of chemistry of people not agreeing on governance or or their own roles, so it's a Pity and then during a crisis, there is a winner and loser, and therefore that kind of emotions goes out of the equation, and that's the reason you have the deals.

So now we are one year later, what are your priorities at this stage, phase one was the integration, the biggest priority right now is to go into the merger of the operating entities, so-call parent company Banks, UBS AG, credit Swiss AG.

You can imagine we have credit Swiss is bringing around 600 legal entities is into the UBS framework, so we need to mer good time for Swiss lawyers.

Moving on a bit, what is it about Switzerland and banking? It's a combination first of all, had completely changed and evolved in the last 30 40 years, when I started my career at 15 was uh all based on banking secrecy and uh and discretion.

And now is it's all about having Professional Services, uh I would say it's a combination of of that, but also uh the reliability of of the Swiss political system, uh the kind of neut it's not really the neutrality, it's more about the stability of the political and and uh the rule of law that allows people the strengths of the Swiss rank as as a currency also gives a lot of confidence to people.

So I think it takes a lot of uh um you know, um uh re reasons to get why Switzerland is as big as you know, it is uh U punching well above its weight, but not only in banking, I if you look at Pharma, you look at Food, you look at Innovation, the universities, Switzerland is a country that punches well above its weights.

Yeah, why is that you think? I I think the fact that we invest a lot in in education, I mean, at the end of the day, we have a pretty flexible and Dynam IC labor market, and a very good education system, which are the prerequisite if you want to be successful in uh nowadays.

One other thing that I think is interesting is just since I started to work in finance in London, uh us investment banks have pretty much wiped away so much of the European competition, why why do you think that is?

So during the financial crisis, the facto U with all the uh the constraint and the Lessons Learned, us Regulators put on their US Banks, one thing they made it clear, they wanted US Banks to continue to be or to be uh the leading Force going forward in in in in in the financial services industry, and so they allow them to grow.

Europe did the contrary, Europe did everything they could have done to uh to don't allow uh Banks to be uh bigger or successful, so and and and and the fragmentation of Europe also from a political not political, but I would say a regulatory and SL political standpoint of view without a capital Market Union without a banking Union has prevented the creation of strong and alternative uh players.

Uh so the reason why we are now emerging as a uh uh David versus goolia is because we are a more capital L, we we are able to uh you know, of course, the Swiss business is very profitable, but it's a 9 million people country, so it's it can really be as big as any major countries.

But because our strength is the the wealth management asset Gathering angle, so few few other banks in Europe can do that, but I do think that uh there is a a political uh uh desire to not allow Banks to become too big, still a lot of parochial thinking in Europe about being big Banks, so each each wants to have their own national champions forgetting that winning the the national championships doesn't take you very far in terms of global same same with Airlines, yeah.

How how important has the Cora culture of UBS been, and what is I mean, how would you define the corpa culture, UBS versus other Banks? I think that we try to be very clear to our people, and uh it's funny because when I started in 2011, 2012, I was confronted with a lot of uh uh criticism by external people, even internally about where the culture of the bank banks in general, the culture of the bank, not not good culture, blah blah blah.

So I try to really say, but is it true, is it true that we don't have a culture, and when I started to look bottom up and top down what we stand for, I realize that we had clearly some common uh commonalities and things that we could build on.

So what we did is to really make a big differentiations between okay, now we look at people in terms of not only compensation, but promotions in scoring uh alongside what people do and how they achieve their results and giving two scores.

Making sure that in order to be a successful leader or member of the team going forward, you can be just great in one or the other, you need to be good at both.

You've said that um we need teamwork, but we cannot be friends all the time, what do you mean by that, well, friends are not I mean, I take my analogy from Sports, and when I was playing young, I mean, it's not like every teammate was a friend, but uh you know, but we had to have one thing in common, we wanted to win the game, and we wanted to make sure that all the people on the pitch would follow and give 100%.

So so that's what I mean is that H we need to have common understanding of what we stand for and our goals and and uh we need to leave out the more emotional part, the Friendship part, if it comes, it's good, I mean, my God, I mean, it's absolutely better to have it that way.

And in some cases, it can be also dangerous because you know, when when you develop too deep of a personal relationship at work, it may over time be a conflicting element that doesn't allow you to be uh a credible leader, uh an unbiased leader, so you have to pay attention all the time how how you balance the two the two factors.

But of course, you know, I can tell you that uh what I saw in the US is I don't know if you heard that anecdote is fantastic uh a colleague of ours uh was uh lost for the second time his kidney, and so he needed desperately to find a second one, and he got a group of UBS people volunteering to donate the kidney, wow, so it must be that something's there developed Beyond being just a colleague, right?

So and you know, I have nothing against that, but of course, it's not something that we should force as an organization.

No, you have been tasked also to find your own successor, how do you go about doing that, well, it's not really I'm part of the process, like I was last time, the responsibility is for the board.

And it's it's really premature because right now, I mean, I made a commitment and the board wants me to to stay till the integration is over, so very minimum the end of 2026, and then early part of 2027, and I think that you know, it's it's part of of of my job, the COO job to be to to offer a numbers of candidates, right?

So one has to be realistic nowadays to to have more than two or three credible candidates is not easy, how do you well, why is it not easy?

Yeah, because I mean, you got how many how many thousand people have you got in the bank now, no, but that's exactly the point is is because no matter I mean, as you as as you go up, uh I'm sure you appreciate that you have maybe a lot of very talented people, a lot of specialized people, so it's not easy to find the people that can then take a broader and more complete um understanding of the business.

And and you know, it's not just a technical issues, also there is the uh the leadership, uh the emotional leadership, uh the knowledge, uh the ability to leave with stress, uh the ability to make decisions.

So you narrow down that you know, when you go down in the organization, you can have extremely you know, talented people and and and and and great professionals, but it's not always easy to then translate all of them into uh broad leaders for a more complex business.

So how do you how do you develop them? For me, the most important issue, which I took from my days at Mar Lynch 17 years, uh is is to really force myself as a uh as a the manager and and and force also every each of us to number one think about what else can a person do in the organization.

So one of the things which I think is is good in my team that a big number of the team members of the executive board could do another job in the executive team, so fungibility is very important.

So be successful in your business, but how much and and what we can do, we have to do, we have to push people at in any level on the organization to move around to do other experiences because I think at the very least, they broaden up their Horizons at the very least, you incentivivate cross collaborations in the organization, but eventually as time goes by, you develop better managers, better more rounded managers.

How long time is how long time does it take to develop a good leader, defining good leader for what t ask to take over UBS 20 years, that's exactly the the same number as James Gman uh said, yeah, okay, but it's very simple, it's justes no, but it's just you take 20, you start, let's say meid 20, you start, and you say, okay, you know, when you get into a level of matureness, and then is mid 40s, early 50s, so it takes around that age.

But it's very simple, it's just you take 20, you start, let's say meid 20, you start, and you say, okay, you know, when you get into a level of matureness, and then is mid 40s, early 50s, so it takes around that age.

But do do companies actually start that early? I mean, how many companies do that? The you we went we went well, I I remember M they were almost at a point in time doing even too much of moving people around.

So you can argue that there is a value in in in in stability, uh in many cases, I found that it's more difficult for in in when you go down in the organizations, uh managers at lower levels are very protective of their best people, so are not so Keen to see them going somewhere else in in the organization.

So what I try to do not as successfully as I want yet, but I still we are making some good inroad is to force both the manager and the employee to mention two jobs they would want to do outside their comfort zone, so in order to uh to avoid uh the feeling that as an as as an employee or subordinate, you are not loyal to your boss when you say that you would like to do something else, I force the manager also to say what do you think that person should do, right?

And how of you doing that, well, we try to put it into our HR System, and then now you know, also using more more and more the CVS, uh the artificial intelligence screening when we look at CVS, and we look at uh uh open positions, so we try to leverage that one also in a way that when we have a talented person that says they would like to do something else, when we say, okay, it's time to force in some cases, I force myself, I force people to take unconventional views on on new appointments, taking talents from other part of the bank.

Uh so I did it few times in in in in my first 10 years.

What makes you in effective leader? I would say at the end of the day, the effective leader is the one that's leads by examples and doesn't abuse The Authority versus the uh so you can get away with uh managing without Authority.

So I mean, I'm not asking people to do things that they don't see me doing, and number two, I'm using very selectively Authority, so I try to to make sure that people smells the coffee before um before I have to say that I want something, right?

So and by doing that, usually you get more tractions and results, and tell me a bit more about how you when you choose to use your Authority, and when you don't, what is what other the situations?

In general, when I lose my patient and and it's is when I think that debate debates and you know, goes on forever without any meaningful outcome, then I step and use more of the authority, right?

Is that the Italian blood? I saw many nordics thinking that way in my in my so it's not.

So what's been the most challenging leadership decision you made after you came back, decision, yeah, well, it's a little bit of a delicate question to be honest, uh but it's always around people, yeah.

The most delicate and most complex are always around people, people the one you is you know, the one thing I I I learned is that uh eventually it's always in my career the regret is not having taken not necessarily just always negative, also positive, not having on board the the right person earlier than I uh than I could or should have or or or letting certain people in the job longer than I should have.

You know, the biggest regret, but regret that help me in any case to develop is always mainly around people rather than through business uh decisions.

You mentioned that um coping with stress was an important feature of being a good CEO, how do you cope with stress? By trying to protect my weekends with family, social activities, skiing.

I I am the the president of a small football club in the village where I live in tachino in Lugano, so you haven't given up football totally, no, no, no, I can't least watch it.

And um I ski a lot in Winter, um so I I really try to protect uh so I rarely rarely don't go home on Friday evening, right, so I for me is very very important not to mix uh the weekends and uh and and switching off also physically.

What I do is really literally I don't stay in Zur or I always go to ski or in gadin or I go to uh the beach with my wife or I I stay in Lugano, but I don't stay a lot in Zur during the weekend.

Because but you manage to take the whole weekend off, Saturday and Sunday, not the full weekend, you mean not touching emails, not no, it's almost impossible, right, but it's a different way to work when you're home over the weekend.

What um we have um tens of thousands of young people listening to this, what would be your advice to young people, well, look, the advice is always the same in my point of view, first of all, you know, it goes without saying and probably the new generation don't need too much of that advice, but you know, just you have to be passionate for what you do.

I mean, you know, I never really did anything because I wanted to be a CEO, right, I mean, first of all, you must be quite sick if you think about early on your you I want to be a my maybe is a is a dream, but it's very few people make it, so you need to work and enjoy what you do and be successful, and over time, maybe a career comes if you just work to for having a career or for the money, it's not going to be very uh very very nice.

So be passionate about what you do, I remember when I was very young, I was waiting for the Monday to go back into the bank and and Tra and being and trading, right, and for me, that was a passion.

And the second one, I would say, uh be flexible and Mobile in terms of uh uh making experiences outside your comfort zone, particularly the physical one, it's very easy today, you know, you always have an excuse, uh boyfriend, girlfriend, whatever, you have uh uh uh your your your comfort zone, but you know, making international experiences, going out and work somewhere else and in a in an uncomfortable Zone, you know, having to learn a new language, having to do something that challenges you, uh it's it's very is very important to to to develop uh the personality and also potentially also from a professional standpoint of view.

It goes without saying that the last things I I do say, I don't know about in uh constantly to our people at UBS, we invest a lot of money in uh in keeping our people up to speed with the best uh developments, uh to to train them, to educate them, we have plenty of courses, and but the first one once needs to do investment in in itself is is the person, don't rely on on the state, don't rely on your company to make you a competitive person in the labor market, rely on yourself, yeah, we can help you, we can support you, but don't rely on us.

Well, soio, you um for sure have relied on yourself, you have shown huge passion in in UBS and in your country, and for sure, you've shown agility by and flexibility by coming back for a second stunt, so big congratulation, and it's been wonderful to talking to you, thank you.