WEBVTT - UBS CEO Sergio Ermotti Talks Market Volatility

0:00:02.520 --> 0:00:07.000
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

0:00:07.800 --> 0:00:10.399
<v Speaker 2>Let's get out to Davos, where Bloomberg Surveillance anchor John

0:00:10.440 --> 0:00:13.680
<v Speaker 2>Ferrer is standing by. John take it away. Hey, guys,

0:00:13.920 --> 0:00:16.880
<v Speaker 2>live from Davos, Switzerland at the World Economic Forum, standing

0:00:16.920 --> 0:00:19.079
<v Speaker 2>by the King of Swiss Banking. He might not like

0:00:19.120 --> 0:00:22.840
<v Speaker 2>that introduction. It's Sergio ad Marti, the ubsc EO surg I.

0:00:22.880 --> 0:00:25.319
<v Speaker 2>Good to see you. Hey, thanks for braving the colde

0:00:25.360 --> 0:00:27.840
<v Speaker 2>I appreciate it. Before we get into the bank, we're

0:00:27.840 --> 0:00:30.000
<v Speaker 2>going to ease into this and start with financial markets.

0:00:30.240 --> 0:00:33.120
<v Speaker 2>What a start to the trading week. Stateside equities open up,

0:00:33.240 --> 0:00:37.440
<v Speaker 2>gap lower, bonyard, tire dollar week. We've seen this movie before.

0:00:37.520 --> 0:00:40.080
<v Speaker 2>Last April got over it pretty quickly. We've thrown a

0:00:40.080 --> 0:00:42.120
<v Speaker 2>lot of this market in the last twelve months. It

0:00:42.159 --> 0:00:44.599
<v Speaker 2>hasn't stuck. Is there something different about the way we're

0:00:44.600 --> 0:00:45.880
<v Speaker 2>set up for twenty twenty six.

0:00:47.040 --> 0:00:50.360
<v Speaker 1>Well, I would say that it's probably the accumulation of

0:00:50.440 --> 0:00:53.440
<v Speaker 1>issues that are now out there and not resolved that

0:00:54.000 --> 0:00:57.120
<v Speaker 1>is becoming a little bit troubling in my point of view.

0:00:57.160 --> 0:00:59.960
<v Speaker 1>So I think that this is the only major change,

0:01:00.360 --> 0:01:04.240
<v Speaker 1>but we have to stay tuned for more volatility. Going

0:01:04.280 --> 0:01:08.840
<v Speaker 1>forward and predictability and rapid changes. So I think that

0:01:09.880 --> 0:01:13.440
<v Speaker 1>staying diversified in financial markets nowadays is pretty important.

0:01:13.600 --> 0:01:16.280
<v Speaker 2>Let's get to what that word means, diversify. It feels

0:01:16.280 --> 0:01:18.800
<v Speaker 2>like that's a diplomatic way of saying South America sometimes,

0:01:18.840 --> 0:01:20.200
<v Speaker 2>and I'm not going to put words in your mouth.

0:01:20.280 --> 0:01:22.759
<v Speaker 2>I'll tell you what others are saying. Pinco is talking

0:01:22.760 --> 0:01:26.600
<v Speaker 2>about a multi year period of diversification away from US assets.

0:01:26.800 --> 0:01:29.760
<v Speaker 2>We've seen from others moving out of US treasuries. There

0:01:29.760 --> 0:01:32.160
<v Speaker 2>was a headline earlier on this morning about a very

0:01:32.160 --> 0:01:34.959
<v Speaker 2>small Danish pension fund and they've got their own issues

0:01:35.000 --> 0:01:37.440
<v Speaker 2>in Denmark right now. Given their relationship with America, what

0:01:37.480 --> 0:01:38.959
<v Speaker 2>are you seeing development.

0:01:38.480 --> 0:01:42.240
<v Speaker 1>Well, Diversifying away from America is impossible. I think that

0:01:43.160 --> 0:01:47.120
<v Speaker 1>in any major asset allocation, one could probably think about

0:01:47.120 --> 0:01:51.360
<v Speaker 1>having an overweight or underweight, But diversifying away from the

0:01:51.440 --> 0:01:55.960
<v Speaker 1>US and also from the dollar is a quite dangerous beat.

0:01:56.440 --> 0:02:00.760
<v Speaker 1>You know, things can change rapidly, and this is the

0:02:00.800 --> 0:02:03.600
<v Speaker 1>strongest economy in the world, the one was the highest

0:02:03.800 --> 0:02:06.200
<v Speaker 1>level of innovation right now is a little bit bumpy,

0:02:06.520 --> 0:02:09.919
<v Speaker 1>but I would say that I wouldn't really bet against

0:02:10.160 --> 0:02:10.959
<v Speaker 1>the US.

0:02:10.720 --> 0:02:13.440
<v Speaker 2>There seems to be a difference between how the politicians

0:02:13.440 --> 0:02:16.080
<v Speaker 2>and the policymakers talk about America right now the backdrop

0:02:16.080 --> 0:02:19.200
<v Speaker 2>for international relations, and how a business person thinks of America,

0:02:19.280 --> 0:02:21.959
<v Speaker 2>the economy and the opportunity. I've mentioned this now a

0:02:22.040 --> 0:02:25.519
<v Speaker 2>number of times already today about the survey the PwC

0:02:25.680 --> 0:02:28.399
<v Speaker 2>put out. They survey four and a half thousand CEOs

0:02:28.639 --> 0:02:32.240
<v Speaker 2>and the top destination for capital for investment America, and

0:02:32.280 --> 0:02:35.440
<v Speaker 2>it was up on last year. As a bank boss

0:02:35.520 --> 0:02:38.720
<v Speaker 2>right now, a CEO who's thinking about expanding around the world,

0:02:39.120 --> 0:02:40.760
<v Speaker 2>why is us still top of mind for you?

0:02:41.360 --> 0:02:44.720
<v Speaker 1>Well, because from our centerraint of view, we see two

0:02:44.720 --> 0:02:49.480
<v Speaker 1>big levers. First of all, wealth creation GDP growth innovations,

0:02:49.600 --> 0:02:53.600
<v Speaker 1>and also more indiosyncratic to UBS is that we see

0:02:53.600 --> 0:02:58.840
<v Speaker 1>potential for us to become more present, increase our market

0:02:58.840 --> 0:03:02.519
<v Speaker 1>share one place. On the other end, we are also

0:03:02.639 --> 0:03:05.680
<v Speaker 1>very big in Asia. I mean we manage one trillion

0:03:05.720 --> 0:03:08.120
<v Speaker 1>of assets there. We are growing very fast, the economy

0:03:08.160 --> 0:03:12.240
<v Speaker 1>is growing. Half of the population in the world is

0:03:12.320 --> 0:03:15.440
<v Speaker 1>living there and is creating new wealth. But you know,

0:03:15.639 --> 0:03:18.839
<v Speaker 1>in the America, in the US, by the way, last year,

0:03:20.440 --> 0:03:24.000
<v Speaker 1>the US created twenty five millions of new millionaires, so

0:03:24.040 --> 0:03:29.240
<v Speaker 1>basically one thousand millionaires a day. So it's a place

0:03:29.280 --> 0:03:32.280
<v Speaker 1>for a financial institution, a wealth manager like UBS is

0:03:32.280 --> 0:03:32.840
<v Speaker 1>a place to be.

0:03:33.040 --> 0:03:34.480
<v Speaker 2>Let's talk about that. Is that something you want to

0:03:34.520 --> 0:03:36.280
<v Speaker 2>do organically or through an acquisition.

0:03:36.920 --> 0:03:41.400
<v Speaker 1>I think that we have enough to do organically. By

0:03:41.960 --> 0:03:45.200
<v Speaker 1>doing better what we can do, we are enhancing our

0:03:45.240 --> 0:03:51.960
<v Speaker 1>product capabilities. We just got a national charter application being

0:03:52.000 --> 0:03:57.560
<v Speaker 1>approved by the OCC. We are expanding our interaction between

0:03:58.000 --> 0:04:00.960
<v Speaker 1>the investment bank and our wealth management people. So I

0:04:00.960 --> 0:04:04.680
<v Speaker 1>think that more things we can do to get better

0:04:04.720 --> 0:04:05.280
<v Speaker 1>and stronger.

0:04:05.360 --> 0:04:07.160
<v Speaker 2>It sounds like you're on the front foot at the

0:04:07.160 --> 0:04:09.120
<v Speaker 2>same time as the boucer in behind me. I'm reminded

0:04:09.120 --> 0:04:11.560
<v Speaker 2>of where we are Switzerland and the issues on the

0:04:11.560 --> 0:04:14.920
<v Speaker 2>horizon potentially for the bank, and that's capital requirements. That

0:04:14.920 --> 0:04:17.200
<v Speaker 2>feels like a cloud that's hanging over this bank right now.

0:04:17.200 --> 0:04:18.800
<v Speaker 2>How quickly do you think we can resolve it?

0:04:20.600 --> 0:04:24.320
<v Speaker 1>Not quickly. I think it's a political process. Most likely

0:04:24.360 --> 0:04:26.880
<v Speaker 1>we're going to find out the direction of travel that

0:04:27.120 --> 0:04:30.520
<v Speaker 1>you know in the middle of the second quarter, and

0:04:30.560 --> 0:04:33.680
<v Speaker 1>then it's still a political process. But you're right that

0:04:33.839 --> 0:04:38.680
<v Speaker 1>this is something that has been quite distracting for us.

0:04:38.720 --> 0:04:41.760
<v Speaker 1>Although we have been quite successful in managing the integration

0:04:41.800 --> 0:04:45.599
<v Speaker 1>of Predy Swiss is almost completed. We are almost you know,

0:04:46.360 --> 0:04:49.960
<v Speaker 1>three months ago and then the vast majority of the

0:04:50.040 --> 0:04:53.000
<v Speaker 1>job is done. So but we look forward for our

0:04:53.000 --> 0:04:54.800
<v Speaker 1>resolution also, I'm sure you do.

0:04:54.920 --> 0:04:57.480
<v Speaker 2>From the strategic standpoint, How is it holding you back?

0:04:57.520 --> 0:04:59.480
<v Speaker 2>How is it distracting you? What are you prevented from

0:04:59.520 --> 0:05:01.200
<v Speaker 2>doing that you've would like to do right.

0:05:01.120 --> 0:05:03.440
<v Speaker 1>Now at this point in time, To be fair, nothing,

0:05:03.480 --> 0:05:07.599
<v Speaker 1>because you know, executing the integration is the top priority.

0:05:07.760 --> 0:05:11.320
<v Speaker 1>We cannot be complacent. Although ninety eighty five percent is done,

0:05:12.160 --> 0:05:16.160
<v Speaker 1>the last fifteen percent is as important. We still need

0:05:16.200 --> 0:05:20.640
<v Speaker 1>to take out three billion of costs and finalize the

0:05:20.680 --> 0:05:24.800
<v Speaker 1>restructuring and then we can We are prepared for growth,

0:05:25.000 --> 0:05:27.400
<v Speaker 1>and that's the reason why we are investing top line

0:05:27.400 --> 0:05:31.840
<v Speaker 1>but also in efficiencies AI and how we can become

0:05:32.279 --> 0:05:33.200
<v Speaker 1>better and stronger.

0:05:33.320 --> 0:05:35.799
<v Speaker 2>Where did the cost come out? You satisfied with the

0:05:35.880 --> 0:05:37.680
<v Speaker 2>size of the workforce. There's more need to be done

0:05:37.680 --> 0:05:38.280
<v Speaker 2>on that side of.

0:05:38.200 --> 0:05:41.560
<v Speaker 1>Well, there is still unfortunately that's the more. You know,

0:05:41.800 --> 0:05:43.840
<v Speaker 1>A big chunk of the savings are going to come

0:05:43.880 --> 0:05:50.520
<v Speaker 1>by disconnecting all the IT systems, data centers. But also

0:05:50.600 --> 0:05:53.040
<v Speaker 1>there is a you know, also a painful still part

0:05:53.520 --> 0:05:56.400
<v Speaker 1>on the account. But it's within what we always announced.

0:05:56.640 --> 0:06:00.960
<v Speaker 1>So you know, I think the direction of travel is said.

0:06:01.040 --> 0:06:03.040
<v Speaker 2>This is the top of the to do list for you,

0:06:03.200 --> 0:06:05.640
<v Speaker 2>and then someone else is going to step in eventually.

0:06:05.880 --> 0:06:08.360
<v Speaker 2>You've offered your thought about where that someone might come from,

0:06:08.600 --> 0:06:11.000
<v Speaker 2>that you'd like to see them come from internally, from

0:06:11.040 --> 0:06:14.160
<v Speaker 2>within the bank, you open to someone coming from the outside.

0:06:14.480 --> 0:06:16.280
<v Speaker 1>Well, we always need to be open. I think that

0:06:16.320 --> 0:06:19.040
<v Speaker 1>the board is not you know, my job is to

0:06:19.680 --> 0:06:23.960
<v Speaker 1>is to prepare and to present to the board as

0:06:24.040 --> 0:06:27.960
<v Speaker 1>many candidate possible for internally and the role of the

0:06:27.960 --> 0:06:31.200
<v Speaker 1>board is to also evaluate external candidates and find the

0:06:31.240 --> 0:06:34.159
<v Speaker 1>best solution for the future. But I would say the

0:06:34.160 --> 0:06:36.600
<v Speaker 1>bank is very strong, My team is very strong, and

0:06:37.320 --> 0:06:41.040
<v Speaker 1>I do believe that, you know, an evolution is what

0:06:41.080 --> 0:06:43.640
<v Speaker 1>we need. Is probably not a revolution, but you know,

0:06:43.800 --> 0:06:45.000
<v Speaker 1>it all depends.

0:06:44.800 --> 0:06:46.720
<v Speaker 2>What's the timeline for that process. Now, can you give

0:06:46.760 --> 0:06:49.120
<v Speaker 2>us an idea. At what point do you present your

0:06:49.200 --> 0:06:51.080
<v Speaker 2>ideas about who might succeed you?

0:06:51.440 --> 0:06:54.720
<v Speaker 1>Well, we always every year I present ideas and you

0:06:54.720 --> 0:06:59.280
<v Speaker 1>know a succession. Succession is not a process that you do.

0:06:59.680 --> 0:07:05.080
<v Speaker 1>You know, only a few months or years before somebody leaves.

0:07:05.120 --> 0:07:09.600
<v Speaker 1>A succession is somebody that we manage every year, and

0:07:09.720 --> 0:07:11.560
<v Speaker 1>from my Iceland point of view, we need to be

0:07:11.800 --> 0:07:14.920
<v Speaker 1>just prepared to have the best person for that moment.

0:07:15.080 --> 0:07:17.600
<v Speaker 2>When that person is selected, there is another seat that

0:07:17.680 --> 0:07:20.760
<v Speaker 2>might open, and it's the chairperson's seat. And I just

0:07:20.800 --> 0:07:23.400
<v Speaker 2>wonder when you step aside a CEO, as the chapter

0:07:23.440 --> 0:07:25.240
<v Speaker 2>truly closed for you and the bank.

0:07:25.960 --> 0:07:28.080
<v Speaker 1>Well, look, you know, right now, I'm very focused on

0:07:28.440 --> 0:07:31.320
<v Speaker 1>finishing my job. Honestly, I think this is still very

0:07:31.320 --> 0:07:36.600
<v Speaker 1>intense activity and then it's going to be you know,

0:07:36.640 --> 0:07:37.360
<v Speaker 1>I need to reflect.

0:07:37.440 --> 0:07:40.120
<v Speaker 2>You realize people watching this won't really believe that, well,

0:07:40.600 --> 0:07:43.480
<v Speaker 2>you are a human being. You were thinking about the

0:07:43.520 --> 0:07:45.040
<v Speaker 2>future and what comes next.

0:07:45.160 --> 0:07:47.920
<v Speaker 1>But people watching there are not expecting me to respond.

0:07:48.640 --> 0:07:50.720
<v Speaker 2>That is true as well, particularly this gentleman right here

0:07:51.400 --> 0:07:53.880
<v Speaker 2>who wants that response from you. Just a final question

0:07:53.960 --> 0:07:55.880
<v Speaker 2>from me. I believe you first took the job as

0:07:55.920 --> 0:07:58.640
<v Speaker 2>CEO back in twenty eleven. As you look back on things,

0:07:58.680 --> 0:07:59.920
<v Speaker 2>and I think this is the appropriate time to be

0:08:00.040 --> 0:08:03.000
<v Speaker 2>and to think about this, your legacy at the bank.

0:08:03.080 --> 0:08:04.840
<v Speaker 2>I'm not sure you ever really thought that we'd end

0:08:04.920 --> 0:08:08.680
<v Speaker 2>up here integrating Credit Suite in the circumstances we did.

0:08:08.960 --> 0:08:11.520
<v Speaker 2>But how would you like your legacy to remembered as

0:08:11.520 --> 0:08:13.240
<v Speaker 2>a leader of UBS.

0:08:14.360 --> 0:08:17.640
<v Speaker 1>I was very proud. I mean in a tragic moment

0:08:17.680 --> 0:08:20.120
<v Speaker 1>for Switzerland and for the banking industry, I was very

0:08:20.120 --> 0:08:22.800
<v Speaker 1>proud in twenty twenty three when I have two years

0:08:22.840 --> 0:08:25.480
<v Speaker 1>after I left that UBS was asked to step in

0:08:25.760 --> 0:08:29.840
<v Speaker 1>and stabilize and help stabilizing credit Swiss and being part

0:08:30.120 --> 0:08:32.760
<v Speaker 1>of the solution. That was for me, the you know,

0:08:33.000 --> 0:08:37.760
<v Speaker 1>almost reaching what I always thought I wanted to show

0:08:37.840 --> 0:08:41.880
<v Speaker 1>with our transformations in the first period. Right now, I

0:08:41.920 --> 0:08:44.720
<v Speaker 1>think that we have a solid bank, a stronger bank

0:08:44.760 --> 0:08:47.800
<v Speaker 1>than before, and I believe we are set for growth.

0:08:48.040 --> 0:08:50.800
<v Speaker 1>So the legacy is always to see that when you

0:08:50.920 --> 0:08:53.679
<v Speaker 1>leave after a couple of years, things are going even better.

0:08:54.040 --> 0:08:55.560
<v Speaker 2>So Jah, it's got to see it. Thanks for making

0:08:55.600 --> 0:08:57.320
<v Speaker 2>time for us. Thank you, We'll get you into the world.

0:08:57.559 --> 0:09:01.320
<v Speaker 2>That was the UBS CEO Sergio Ramoti speaking with Bloomberg

0:09:01.400 --> 0:09:04.200
<v Speaker 2>Surveillance right here at the World Economic Forum