When Sergio Ermotti became Managing Director of UBS in November 2011, the 158-year-old Swiss bank was at one of the lowest points in its history.
Markets plunged amid the eurozone sovereign debt crisis, and months earlier UBS had revealed that a thug trader had hidden 1.8 billion francs ($ 2 billion) in losses, a scandal that destroyed Mr. Ermotti’s predecessor, Oswald Grübel.
Mr Ermotti, who joined UBS in 2010 from UniCredit in Italy, received a promotion on the battlefield to right the ship alongside a new president. Axel weber, former professor of economics and former president of the Bundesbank.
Nine years later, the 60-year-old resigns amid a new kind of crisis, which he describes as “profoundly different” because customers and staff are “scared for their lives” this time around, not just for their home or investments.
“Do I like seizures? I’m not that masochistic. . . but of course I know this is when I’m supposed to be the most visible, ”says Ermotti. “It’s very difficult to take advantage of a situation like this, but of course it makes the job fantastic when you never really know what’s coming next.”
Mr. Ermotti will hand over to Ralph Hamers in November and take over as chairman of the insurer Swiss Re. There is no doubt that despite the lingering issues of misconduct, such as the bank’s potential € 4.5 billion fine for helping French clients escape tax – he leaves UBS in better shape than he found.
Since 2011, UBS has made pre-tax profit of $ 37 billion and returned $ 20 billion to shareholders, while absorbing $ 15 billion in litigation and regulatory costs.
The CEO was applauded for a judicious repositioning after the financial crisis, reducing – but retaining – the commercial arm of investment banking and strengthening its position as the world’s largest wealth manager, increasing assets under management by more than ‘$ 1 billion to $ 2.6 billion. Many, including rival Credit Suisse, have copied his strategy.
Mr Ermotti said the best decision he made was to ignore the outcry from reporters, analysts and shareholders calling on him to sell the US wealth management company and shut down the bank. investment following the fraudulent transactions scandal.
“My best decision was not to follow the consensus. . . I’m sure I wouldn’t be the CEO today if I had, ”he says. “Looking back, it’s always easy [to second-guess], but as a leader your first instinct is usually the right one. . . So if I have to learn anything, it is to trust those instincts even more. “
Wealth management in the Americas contributed to pre-tax profit of $ 1.3 billion last year and investment banking – despite a string of embarrassing losses in 2019 – benefited from a push of business income during the coronavirus, cushioning the blow caused by hundreds of millions of dollars in potential losses due to defaults on consumer loans.
“My advice to Ralph is to take his time and not listen to the consensus,” says Ermotti. He should “not be tempted to impress people just for the fun of it in the first few months.”
At the start of the pandemic, Mr Ermotti was working a few days a week from his office in Lugano – the small lakeside town where he was born, 200 km south of Zurich on the Italian border.
During the coronavirus, “the intensity was different than usual. The topics covered are all top priorities, ”he says.
At the lowest of the pandemic in Europe at the end of March, UBS had more than 90 percent of its staff working from home.
“I know it’s a problem when you have a family, maybe a husband and wife who both work with children, how logistically complicated it can be,” he says.
Mr. Ermotti had to learn to communicate in a different way, making the staff “comfortable working in a safe place, that we care about them. . . the soft part of the equation, a dimension that has never been more present than before, to be honest ”.
Three questions for Sergio Ermotti
Who is your leadership hero?
My heroes when I was young were footballers, like Johan Cruyff. I don’t know if that sounds arrogant, but from a leadership standpoint, I don’t have a hero.
If you weren’t a leader, what would you be?
If you are not a leader, you are a follower, right? I started at 27 to be a leader, to lead small teams and so on. It’s now almost part of my DNA.
What was the first lesson in leadership you learned?
My father was a normal employee of a bank responsible for the postal service. So nothing very important, but he took it very seriously, very passionately. I saw him work until his last day before retirement as if he was there to work for the next five years. This is probably something that motivates me now to really give 100% to UBS until the last minutes.
In 1975, Mr. Ermotti left school at age 15 to become a footballer, but quickly realized he “wasn’t good enough” and decided to become a sports teacher instead. But first, he had to do an apprenticeship and was assigned to the securities department of a family private bank.
Initially dismissing business as “boring,” the experience “changed my life” and “when I was 16, I knew I wanted to be a trader,” he says. “I heard people talk about political issues, economics, the financial market was hectic, everything that was going on in the world was affecting what these people were doing. . . every day was different.
His first big move was to Citibank in Zurich, and then in 1987, Merrill Lynch asked him to open an operation in the Swiss capital markets when he was only 27 years old.
Running rapacious trading rooms and overseeing wealth managers with the ear of some of the world’s richest people, Mr. Ermotti has had to deal with many mercurial figures, including a former wealth management boss. Jürg Zeltner – died this year – and Andrea Orcel, which he recruited to turn around UBS’s investment bank.
When managing ‘great personalities. . . I always try to be complementary, to let people run their business, to intervene only when necessary, ”he says.
I have “a philosophy like when I was captain of the football team in my youth. . . You have to create teamwork, knowing that it is not possible to be friends all the time.
“As long as everyone was driving in the same direction, I had no problem. . .[but]when people think more about their own personal profile and their own interests than. . . the good of the customers and the organization, that doesn’t work, ”he adds.
“I don’t want to have blind loyalty, but I expect fairness and transparency, and when I find out people aren’t like that, I act on it.”
Does that mean getting rid of it? “Yes.”
Mr. Ermotti has never shied away from expressing direct opinions. Still one of the highest paid bankers in Europe – earning an average of 11.5 million francs a year during his tenure – in 2017, he said criticism from regulators on premiums were “created by people who may be frustrated that they don’t make that kind of money.”
Last year he started a Twitter account, @UBS_CEO. And when the bank was going through a bad profit patch, it got stuck in a French tax scandal for € 4.5 billion, has been criticized for cutting women’s wages maternity leave and speculation swirled about his future, he sometimes used it to castigate news agencies, including the Financial Times, for their coverage of the lender.
Mr. Ermotti maintains that he takes criticism well as a leader, when it is justified. “I’m generally open to criticism, but what I don’t like are superficial and uninformed people,” he says. “If there’s one thing I really hate, it’s hypocrisy. . . For me, this is one of the worst ailments in our society.