Sergio Ermotti: ‘My finest resolution was to not observe consensus’

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When Sergio Ermotti grew to become chief government of UBS in November 2011, the 158-year-old Swiss financial institution was at one of many lowest factors in its historical past.

Markets have been plunging amid the eurozone sovereign-debt disaster and simply months earlier UBS had revealed {that a} rogue dealer had hidden SFr1.8bn ($2bn) of losses, a scandal that took down Mr Ermotti’s predecessor, Oswald Grübel.

Mr Ermotti, who had joined UBS in 2010 from Italy’s UniCredit, acquired a battlefield promotion to proper the ship alongside new chairman Axel Weber, an ex-economics professor and former Bundesbank president.

9 years later, the 60-year-old is stepping down in the course of a brand new type of disaster, one he describes as “profoundly completely different” as a result of shoppers and workers are “scared for his or her lives” this time, not only for their houses or investments.

“Do I take pleasure in crises? I’m not as masochistic as that . . . however after all I do know that is the time the place I’m meant to be most seen,” Mr Ermotti says. “It’s very tough to take pleasure in such a scenario, however after all, it makes the job a incredible one while you by no means actually know what’s subsequent.”

Mr Ermotti will hand over to Ralph Hamers in November and transfer to chair insurer Swiss Re. There’s little doubt that regardless of lingering misconduct points — such because the financial institution’s potential €4.5bn nice for serving to French shoppers evade tax — he leaves UBS in a greater state than he discovered it.

Since 2011, UBS has made $37bn in pre-tax revenue and returned $20bn to shareholders, all whereas absorbing $15bn of litigation and regulatory prices.

The chief government received plaudits for a shrewd repositioning after the monetary disaster, slashing again — however retaining — the funding financial institution’s buying and selling arm and solidifying its place because the world’s largest wealth supervisor, rising belongings beneath administration by greater than $1tn to $2.6tn. Many, together with rival Credit score Suisse, copied his technique.

Mr Ermotti says the very best resolution he made was to disregard the clamour from journalists, analysts and shareholders calling on him to promote the US wealth enterprise and shut down the funding financial institution within the wake of the rogue-trading scandal.

“My finest resolution was to not observe consensus . . . I’m certain I wouldn’t be the CEO right this moment if I had completed it,” he says. “With hindsight it’s at all times straightforward [to second-guess], however as a frontrunner, your first intuition is often the fitting one . . . So if I’ve to study something, it’s to depend on these instincts much more.”

Wealth administration within the Americas contributed pre-tax revenue of $1.3bn final yr and the funding financial institution — regardless of a collection of embarrassing losses in 2019 — has benefited from a surge in buying and selling income throughout coronavirus, cushioning the blow from 100s of thousands and thousands of {dollars} in potential losses from consumer-loan defaults.

“My recommendation to Ralph is to take his time and to not take heed to the consensus,” Mr Ermotti says. He ought to “to not be tempted to impress individuals only for the sake of it within the first few months”.

Within the early days of the pandemic, Mr Ermotti labored a couple of days every week from his residence workplace in Lugano — the small lake city the place he was born, 200km south of Zurich on the Italian border.

Throughout coronavirus “it’s been a unique depth than standard. The matters mentioned are all high priorities,” he says.

On the nadir of the pandemic in Europe in late March, UBS had greater than 90 per cent of its workers working from residence.

“I do know it’s a problem when you’ve gotten a household, possibly a husband and spouse each working with children round, how difficult it may be logistically,” he says.

Mr Ermotti has needed to study to speak otherwise, making workers “comfy that they’re working in a secure place, that we care about them . . . the delicate a part of the equation, a dimension that was by no means as current earlier than, to be trustworthy”.

Three questions for Sergio Ermotti

Johann Cruyff, one of Sergio Ermotti’s heroes when he was young
Johann Cruyff, one in all Sergio Ermotti’s heroes when he was younger

Who’s your management hero?

My heroes after I was younger have been soccer gamers, like Johan Cruyff. I don’t know if this sounds smug, however from a management viewpoint, I don’t have any heroes.

If you weren’t a frontrunner, what would you be?

In case you’re not a frontrunner, you’re a follower, proper? I began at 27 to be a frontrunner, to run small groups and so forth. That is now virtually a part of my DNA.

What was the primary management lesson you learnt?

My father was a traditional worker of a financial institution chargeable for the mail service. So nothing crucial, however he took it very significantly, very passionately. I noticed him working till his final day earlier than retirement like he was there to work for the subsequent 5 years. That is most likely one thing that’s now motivating me to essentially give 100 per cent to UBS until the final minutes.

In 1975, Mr Ermotti left faculty at 15 to develop into a soccer participant, however shortly realised he “wasn’t ok” and determined to be a sports activities instructor as a substitute. However first, he was required to do an apprenticeship and was assigned to the securities division of a family-run personal financial institution.

Initially dismissing enterprise as “boring”, the expertise “modified my life” and “by the point I used to be 16 I knew I needed to be a dealer”, he says. “I heard individuals speaking about political issues, economics, the monetary market was hectic, the whole lot that was happening on this planet was affecting what these individuals have been doing . . . daily was completely different.”

His first large transfer was to Citibank in Zurich, then in 1987 Merrill Lynch requested him to open a Swiss capital markets operation when he was solely 27.

Working rapacious buying and selling flooring and overseeing wealth managers with the ear of a number of the world’s richest individuals, Mr Ermotti has needed to cope with many mercurial characters, notably ex-wealth administration boss Jürg Zeltner — who died this yr — and Andrea Orcel, whom he recruited to show round UBS’s funding financial institution. 

When managing “large personalities . . . I at all times attempt to be complementary, let individuals handle their enterprise, intervene solely when needed”, he says.

I’ve “a philosophy like after I was captain of the soccer crew in my youthful years . . . You’ll want to create teamwork, whereas understanding that it’s not attainable to be mates on a regular basis.

“So long as everyone drives in the identical course, I had no issues . . . [but] when individuals are pondering extra about their very own private profiles and their very own pursuits than . . . the nice of the shoppers and the organisation, it’s not working,” he provides.

“I don’t need to have blind loyalty, however I anticipate trueness and transparency, and after I uncover that individuals are not that method, I act accordingly.” 

Does that imply eliminating them? “Sure.”

Mr Ermotti has by no means been shy about voicing blunt opinions. Persistently one in all Europe’s best-paid bankers — incomes a median of SFr11.5m a yr over his tenure — in 2017 he stated regulators’ criticisms of bonuses have been “made by people who find themselves possibly pissed off that they don’t make that type of stage of cash”.

Final yr he began a Twitter account, @UBS_CEO. And when the financial institution was going via a nasty patch of earnings, grew to become mired in a €4.5bn French tax scandal, was criticised for slashing the pay of girls on maternity depart and hypothesis swirled about his future, he often used it to lambast information organisations, together with the Monetary Occasions, about their protection of the lender.

Mr Ermotti maintains that he takes criticism nicely as a frontrunner, when it’s justified. “Typically talking, I’m open to criticism, however what I don’t like is people who find themselves superficial and never well-informed,” he says. “If there’s one factor I actually hate, it’s hypocrisy . . . For me, it is likely one of the worst malaises in our society.”

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