UBS CEO Sergio Ermotti Talks Market Volatility

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Let's get out to Davos, where Bloomberg Surveillance anchor John Ferrer is standing by. John take it away. Hey, guys, live from Davos, Switzerland at the World Economic Forum, standing by the King of Swiss Banking. He might not like that introduction. It's Sergio ad Marti, the ubsc EO surg I. Good to see you. Hey, thanks for braving the colde I appreciate it. Before we get into the bank, we're going to ease into this and start with financial markets.

Well, I would say that it's probably the accumulation of issues that are now out there and not resolved that is becoming a little bit troubling in my point of view. So I think that this is the only major change, but we have to stay tuned for more volatility. Going forward and predictability and rapid changes. So I think that staying diversified in financial markets nowadays is pretty important.

Let's get to what that word means, diversify. It feels like that's a diplomatic way of saying South America sometimes, and I'm not going to put words in your mouth. I'll tell you what others are saying. Pinco is talking about a multi year period of diversification away from US assets. We've seen from others moving out of US treasuries. There was a headline earlier on this morning about a very small Danish pension fund and they've got their own issues

Well, Diversifying away from America is impossible. I think that in any major asset allocation, one could probably think about having an overweight or underweight, But diversifying away from the US and also from the dollar is a quite dangerous beat. You know, things can change rapidly, and this is the strongest economy in the world, the one was the highest level of innovation right now is a little bit bumpy, but I would say that I wouldn't really bet against the US.

There seems to be a difference between how the politicians and the policymakers talk about America right now the backdrop for international relations, and how a business person thinks of America, the economy and the opportunity. I've mentioned this now a number of times already today about the survey the PwC put out. They survey four and a half thousand CEOs and the top destination for capital for investment America, and

Well, because from our centerraint of view, we see two big levers. First of all, wealth creation GDP growth innovations, and also more indiosyncratic to UBS is that we see potential for us to become more present, increase our market share one place. On the other end, we are also very big in Asia. I mean we manage one trillion of assets there. We are growing very fast, the economy is growing. Half of the population in the world is

Let's talk about that. Is that something you want to do organically or through an acquisition.

I think that we have enough to do organically. By doing better what we can do, we are enhancing our product capabilities. We just got a national charter application being approved by the OCC. We are expanding our interaction between the investment bank and our wealth management people. So I think that more things we can do to get better and stronger.

It sounds like you're on the front foot at the same time as the boucer in behind me. I'm reminded of where we are Switzerland and the issues on the horizon potentially for the bank, and that's capital requirements. That feels like a cloud that's hanging over this bank right now. How quickly do you think we can resolve it?

Not quickly. I think it's a political process. Most likely we're going to find out the direction of travel that you know in the middle of the second quarter, and then it's still a political process. But you're right that this is something that has been quite distracting for us. Although we have been quite successful in managing the integration of Predy Swiss is almost completed. We are almost you know, three months ago and then the vast majority of the

From the strategic standpoint, How is it holding you back? How is it distracting you? What are you prevented from doing that you've would like to do right.

Now at this point in time, To be fair, nothing, because you know, executing the integration is the top priority. We cannot be complacent. Although ninety eighty five percent is done, the last fifteen percent is as important. We still need to take out three billion of costs and finalize the restructuring and then we can We are prepared for growth, and that's the reason why we are investing top line but also in efficiencies AI and how we can become better and stronger.

Where did the cost come out? You satisfied with the size of the workforce. There's more need to be done on that side of.

Well, there is still unfortunately that's the more. You know, A big chunk of the savings are going to come by disconnecting all the IT systems, data centers. But also there is a you know, also a painful still part on the account. But it's within what we always announced. So you know, I think the direction of travel is said.

This is the top of the to do list for you, and then someone else is going to step in eventually. You've offered your thought about where that someone might come from, that you'd like to see them come from internally, from within the bank, you open to someone coming from the outside.

Well, we always need to be open. I think that the board is not you know, my job is to is to prepare and to present to the board as many candidate possible for internally and the role of the board is to also evaluate external candidates and find the best solution for the future. But I would say the bank is very strong, My team is very strong, and I do believe that, you know, an evolution is what we need. Is probably not a revolution, but you know, it all depends.

What's the timeline for that process. Now, can you give us an idea. At what point do you present your ideas about who might succeed you?

Well, we always every year I present ideas and you know a succession. Succession is not a process that you do. You know, only a few months or years before somebody leaves. A succession is somebody that we manage every year, and from my Iceland point of view, we need to be just prepared to have the best person for that moment.

When that person is selected, there is another seat that might open, and it's the chairperson's seat. And I just wonder when you step aside a CEO, as the chapter truly closed for you and the bank.

Well, look, you know, right now, I'm very focused on finishing my job. Honestly, I think this is still very intense activity and then it's going to be you know, I need to reflect.

You realize people watching this won't really believe that, well, you are a human being. You were thinking about the future and what comes next.

But people watching there are not expecting me to respond.

That is true as well, particularly this gentleman right here who wants that response from you. Just a final question from me. I believe you first took the job as CEO back in twenty eleven. As you look back on things, and I think this is the appropriate time to be and to think about this, your legacy at the bank. I'm not sure you ever really thought that we'd end up here integrating Credit Suite in the circumstances we did. But how would you like your legacy to remembered as a leader of UBS.

I was very proud. I mean in a tragic moment for Switzerland and for the banking industry, I was very proud in twenty twenty three when I have two years after I left that UBS was asked to step in and stabilize and help stabilizing credit Swiss and being part of the solution. That was for me, the you know, almost reaching what I always thought I wanted to show

So Jah, it's got to see it. Thanks for making time for us. Thank you, We'll get you into the world. That was the UBS CEO Sergio Ramoti speaking with Bloomberg Surveillance right here at the World Economic Forum