UBS boss warns of European decline with ‘over-regulation across the board’

UBS CEO Sergio Ermotti. Keystone / Claudio Thoma

Europe will continue to fall behind the US and Asia until a severe crisis forces politicians to act, UBS chief executive Sergio Ermotti has warned, blaming the continent’s decline on “over-regulation across the board”.

Ermotti said “things are bad” in Europe “but not bad enough to take action”, pointing to “no growth” and a “clear divergence” in productivity compared with rival economic powers.

“If it would be over-regulation only in banking, one could probably live with it. We have over-regulation across the board. That’s the real problem. The amount of bureaucracy, [the] lack of innovation that goes on is a fact,” Ermotti said in a video interview with the Financial Times.

He said it would take a “very profound and painful crisis” such as the 2012 Greek debt crisis – when the country teetered on the verge of financial collapse – to pressure European politicians to confront its economic malaise.

The Swiss executive added: “As long as you have governments promising that they can fix issues with higher taxes, more debt and more fiscal stimulus – regardless of the fact that we have already a high level of indebtedness in the system – no politicians will be elected by asking people to make sacrifices.”

The intervention from Ermotti, one of the most influential voices in European finance, underscores the challenges facing the continent as it battles to invigorate its economy. His comments echoed JPMorgan Chase chief Jamie Dimon, who last year said Europe was “losing” the race to rival the US and China.

Ermotti was speaking as UBS faces its own tussle with politicians and regulators in Switzerland over proposed banking reforms, sparked by the collapse of Credit Suisse in 2023, which would force UBS to increase its capital by $20 billion (CHF15.5 billion).

The Swiss government last month watered down part of the reform package in a concession to the lender but refused to back down on its core demands, frustrating UBS executives.

“[The reforms] are not proportionate. They are not targeted. They are not internationally aligned and they do not recognise a big chunk of the root causes why Credit Suisse went down . . . We can’t have a requirement that is 50% higher than our peers,” Ermotti said.

However, the core part of the package will now go to parliament for debate and Ermotti said he was “hopeful” that lawmakers would reduce the potential $20 billion capital hit.

Moving out of Switzerland?

Asked if he could rule out shifting UBS’s headquarters out of Switzerland, Ermotti said: “Our focus right now is to ensure that UBS can continue to operate out of Switzerland as a successful bank. We are not even thinking about another option.”

He added: “It’s a fiduciary duty of the board of directors and management to examine any potential options. But we are not spending time in over-engineering that topic.”

UBS has held discussions about moving its headquarters to the US if the capital proposals were not eased, the FT previously reported. Activist investor Cevian Capital also said the lender would have “no other realistic option” but to leave the country if the proposed reforms were not scaled back.

Ermotti left the door open to staying on as the bank’s chief beyond 2028, despite committing to a three- to five-year term when he returned to run UBS for a second time in 2023.

“[Our chair] said I’m going to stay as long as needed. And we still have a couple of issues to resolve. We’re not going to put any timeframe [on it],” said Ermotti, who turns 66 next week.

He warned of a “high degree of complacency in financial markets” even before the conflict in the Middle East began in February, and said recent issues in the private credit industry “could be systemic” but were not comparable to the 2008 financial crisis.

Copyright The Financial Times Limited 2026