UBS CEO Ermotti Warns Swiss Banking Reforms Go Too Far

(Bloomberg) — UBS Group AG Chief Executive Officer Sergio Ermotti said the proposed new banking reforms in Switzerland go “too far” and that lender needs a competitive regulatory framework to grow.

“This is now a political process,” Ermotti said during an interview with Bloomberg TV on Tuesday from Shanghai. “We hope we’re going to get more clarity by the second half of the year.”

Ermotti, who was hosting an annual conference for investors and clients in China, sounded an upbeat note on the world’s second-largest economy. The lender has increased capital in China and plans to hire broadly across Asia, including Japan, he said.

Back in Switzerland, Ermotti said that “he can’t be confident” that there will be a resolution acceptable to UBS, but that he was “pleased to see that there’s political interest to go deeper and fully understand the details.”

He also said UBS is “proud to be a Swiss bank.”

The lender’s leadership is trying to convince the Swiss government to water down planned changes to regulation that could impose as much as $26 billion in fresh capital requirements on the bank. UBS has been looking at options with regards to the Swiss capital issue since last year, and has reportedly held talks with US Treasury Secretary Scott Bessent about a potential relocation of headquarters.

Last month, a group of Swiss lawmakers put forward a compromise solution that would allow UBS to use AT1 bonds for 50% of the funds it needs to give full backing of its foreign units instead of more expensive common equity tier 1 capital.

UBS yesterday said the planned Swiss reforms are a threat to the national economy, adding that the plan in its current form would also “jeopardize the continuation of the successful UBS business model.”

Asia Growth

In Asia, the lender will hire about 100 people across the wealth management segment this year and has increased capital in its China business to help with an expansion, Ermotti said. The bank also plans to issue a so-called Panda bond in China to raise capital, according to the CEO.

“We see more interest from overseas, which is indicating at the momentum of the Chinese market,” he said. “We believe this is going to continue. The secular trend supporting China in terms of growth in the innovation, technology and biotech is here to stay.”

The Swiss bank is also looking to expand further in Japan “across the board” in all core businesses from wealth management to investment banking, he said in the interview.

Asia has been the biggest growth engine contributing to 25% to 30% of the group’s profit in the past few years, according to the CEO.

In a speech at the conference, Ermotti said that the bank’s total invested assets in Asia topped $1 trillion in Asia Pacific, and that it had a record financial performance in China.

Integration

UBS is also wrapping up the integration of Credit Suisse, seeking to have all global clients migrate to the UBS system by end of the first quarter, Ermotti said. Some IT and data centers will soon be shut down, resulting in personnel reduction.

“We’re gonna manage that below 3,000 redundancies between now and the early part of 2027,” he said.

The CEO plans to step down in April 2027, the Financial Times reported on Tuesday, citing unidentified people. Ermotti said in 2024 he planned to stay at the helm of the bank until the completion of absorbing Credit Suisse, which could be the end of 2026 or early 2027.

–With assistance from Adrian Wong.

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