UBS Integration Complete, But Requires $20 Billion More Capital

Despite exceeding earnings expectations with a 70% profit increase, UBS CEO Sergio Ermotti emphasises the need for substantial additional capital in light of the Credit Suisse merger. While attributing recent success to cost reductions and customer trust, he acknowledges that that further integration will require approximately $20 billion more in capital for the newly expanded UBS.

Ermotti outlines a proactive strategy for 3,000 job cuts in Switzerland by 2026, stressing efforts to support affected employees in finding alternative positions. The CEO confirms plans to merge parent companies in May, with a priority on minimising customer disruption during platform migration.

Regarding the Federal Council's "too big to fail" proposal, Ermotti supports regulatory reform while expressing frustration about the lack of UBS involvement in the report's development. He addresses the $9 billion capital injection related to Credit Suisse's past relief, plus a further $10 billion to balance the banks' combined size. However, pending regulatory clarity, Ermotti suggests share buyback programs and dividend policies might face delays.

Despite market pressures, Ermotti aims to raise the dividend this year and anticipates $1 billion in share buybacks post-merger in 2024. He emphasizes ongoing investor dialogue, acknowledging concerns about the new rules possibly impacting UBS's global competitiveness.
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Credit to Srf.ch