Access the Editor’s Summary without charge
Each week, the FT’s Editor, Roula Khalaf, compiles her preferred articles for this bulletin.
UBS received instructions to reduce the intensity of its advocacy efforts amidst the dispute with the Swiss administration regarding financial regulations, even while the financial institution examines proposals to prolong its chief executive’s period in office past the upcoming year.
For almost two years, Switzerland’s foremost banking entity has been in disagreement with the authorities concerning strategies compelling it to augment its capital reserves by as much as $26 billion. Nonetheless, the government’s position has become more rigid lately, as the finance minister dismissed a crucial conciliatory suggestion.
Legislators cautioned UBS to lower the public visibility of its chief executive, Sergio Ermotti, when contesting the modifications, according to two individuals apprised of the situation. “A substantial segment of the legislative body actually aligns with the bank [on a significant point of dispute], yet we have informed them that their advocacy efforts, especially remarks by Ermotti, are currently unconstructive,” one of the legislators stated.
A different legislator in Switzerland’s senior chamber disclosed that they had confidentially recommended the bank to “re-evaluate its advocacy endeavors”, especially since the rapport between the bank’s leadership and Switzerland’s finance minister, Karin Keller-Sutter, has worsened.
In December, a collection of conciliatory propositions for capital restructuring, put forward by a multi-party assembly of Swiss politicians, was viewed as a possible major advance for the financial institution.
Nevertheless, Keller-Sutter dismissed these conciliatory suggestions, which advocated for substantially diluting the administration’s initial schemes, thereby shattering expectations that both parties might discover a practical resolution.
The alteration in the government’s stance has compelled UBS to re-examine its leadership transition strategy, as the bank’s board is conversing with Ermotti regarding his continuation past the upcoming year, as reported by individuals acquainted with the situation.
Ermotti, having resumed leadership of UBS in 2023 subsequent to its government-arranged acquisition of Credit Suisse, had aimed to resign from his chief executive role in April 2027, after the amalgamation of the two financial institutions was finalized, as the FT disclosed in January.
Ermotti, aged 65, earlier stated his intention to head the bank until “at a minimum” late 2026 or early 2027, refraining from designating a precise date.
However, UBS’s governing body is now receptive to Ermotti prolonging his term even more, enabling him to guide the institution until greater assurance regarding its prospective capital status emerges, sources indicated. He has not yet rendered a conclusive judgment on whether he will remain past April 2027, the sources further stated.
The Swiss publication NZZ initially broke the news that UBS was considering prolonging Ermotti’s term.
The institution’s governing body has identified several prospective replacements for Ermotti, among them wealth management co-leaders Iqbal Khan and Robert Karofsky; asset management head Aleksandar Ivanovic, and chief operating executive Bea Martin.
An individual conversant with UBS’s advocacy endeavors stated that reducing Ermotti’s public visibility was not an action the bank would contemplate.
UBS affirmed that Ermotti would “continue as Group CEO until a minimum of early 2027”, further stating: “given that the amalgamation will only be largely finished by the close of 2026, as scheduled, and significant tasks lie ahead to prepare the bank for the subsequent stage of its strategic plan and expansion path, it is too early to conjecture about the precise moment of Sergio’s departure”.
“When the opportune moment arrives to determine a replacement, the board will have access to a robust pool of internal contenders, yet will naturally uphold its fiduciary responsibility by also appraising external nominees,” the financial institution declared.