Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Since the twenty sixth annual GCC here in Shanghai, we've
Speaker 2: been covering a lot of them and we are very
Speaker 2: pleased to bring in the guest of honor, not the guest,
Speaker 2: he's the host. I'm the guest here at the GCC
Speaker 2: and Edi Sergio Almari ubs GRIP CEO, thanks so much
Speaker 2: for having us here this again. What is your message
Speaker 2: to the thirty six hundred or thereabout participants here at
Speaker 2: the GCC this year and what's your general outlook for
Speaker 2: business in China for your bank?
Speaker 1: Well, actually, it's also great for me to be back here.
Speaker 1: You know, last year was a quite you know, important
Speaker 1: year for China. I think that we saw a huge
Speaker 1: interest coming back on the Chinese market.
Speaker 3: You know, stock performance.
Speaker 1: Was great and we see today, I mean we have
Speaker 1: almost three thousand and six UNDERD participants. You go through
Speaker 1: across the board from corporates, institutional clients, family offices, and
Speaker 1: you're not coming from also all over the world. We
Speaker 1: sealed some more interest from overseas, which is indicating.
Speaker 3: The momentum of the Chinese market.
Speaker 1: So I think that you know, we believe this is
Speaker 1: going to continue the secular trend support in China in
Speaker 1: terms of growth in innovation, in technology, in biotech is
Speaker 1: easier to stay and investors are realizing that.
Speaker 2: So what kind of deal flow though, are you starting
Speaker 2: to see? Is as we are starting to see China
Speaker 2: get some more ventum. You talked about the stock market
Speaker 2: the cs I three hundred of about seventeen percent last year,
Speaker 2: so it is it's gaining some steam. But also outbound
Speaker 2: deal flow seems to be growing quite a bit, whether
Speaker 2: it's investing in factories in Europe or in the Global South.
Speaker 2: It seems like capital is not only coming into China.
Speaker 2: We're foreign interest is obviously looking at that rebound, but
Speaker 2: also the capital is moving abroad.
Speaker 1: Yeah, I mean, look, you know it's a good mix
Speaker 1: of businesses, but you know, when you look at, for example,
Speaker 1: the underweight of international investors to China almost half from
Speaker 1: around two and a half percent in twenty twenty four
Speaker 1: to one point three percent or so in twenty twenty five.
Speaker 1: So this is a significant change on a year on
Speaker 1: year basis, and this is the is the main driver.
Speaker 1: We continue to see a lot of activity around IPUs,
Speaker 1: particularly the record IPO issues last year. In Hong Kong,
Speaker 1: which are probably going to stay with us. Also in
Speaker 1: twenty twenty six, we.
Speaker 3: See a lot of activity across Asia.
Speaker 1: Inbound and outbound M and A in Japan is a
Speaker 1: three folds. So in general, I would say that you
Speaker 1: will continue to see momentum of you know, a Chinese
Speaker 1: investors investing abroad, but also you know capital coming into
Speaker 1: the country.
Speaker 3: What's going to be your priority on shore?
Speaker 2: For twenty twenty six, last year you got the full
Speaker 2: one hundred percent securities license.
Speaker 3: What's going to be the perer A. We are working
Speaker 3: on all of this.
Speaker 1: We also last year we also made a capital incluse
Speaker 1: in our local entities and I think this year we
Speaker 1: are now planning to launch a Panda bond, and so
Speaker 1: I think that we want to continue to foster, you know,
Speaker 1: our presence in China. We have been in China for
Speaker 1: mainland China for thirty five years.
Speaker 3: We have been in On Kong for sixty years.
Speaker 1: So this is really part of our core business. I mean,
Speaker 1: if if you think about we are managing in the
Speaker 1: region more than a trillion of assets, eight hundred plus
Speaker 1: in wealth management and two hundred and fifteen in asset management.
Speaker 1: So we want to continue to reinforce that position, but
Speaker 1: at the same time our leading position in the investment bank.
Speaker 3: Across the board and where we are a leader.
Speaker 1: In the region and in China mainland China particularly, and
Speaker 1: also in asset management through our very successful joint venture
Speaker 1: with ICBC.
Speaker 2: What can you tell us about the ranging of that pandamond,
Speaker 2: the size and timing and the likes.
Speaker 1: This is still to be determined, but the decision has
Speaker 1: been taken to issue pandamond.
Speaker 2: So on shore versus Hong Kong or Greater China, what's
Speaker 2: going to be the emphasis on shore as far as hiring.
Speaker 2: I mean, you're very strong in wealth management obviously asset management.
Speaker 3: What's going to be the priority?
Speaker 1: Well, look, this year I think that our goal is
Speaker 1: to continue to working with local universities hiring young talents.
Speaker 1: We employ around one thy three hundred people in China
Speaker 1: is behalf of them are in Shanghai and the rest
Speaker 1: is in Beijing and the rest of in Shenzhen. We
Speaker 1: we're probably going to had around one hundred people this
Speaker 1: year in China and so but we are you know,
Speaker 1: as I said, we are also investing not only in
Speaker 1: seasoned professionals, but.
Speaker 3: Also in the young generation of people for the franchise.
Speaker 2: So obviously you still have some personnel issues on the
Speaker 2: cost reductions from the integration with credit suites. That's separate
Speaker 2: from what you're going to plan to hire across Asia
Speaker 2: and in China.
Speaker 1: Yeah, Look, when I look at Asia in general, the
Speaker 1: integration is over, is done. So I think that we
Speaker 1: completed the integration in twenty actually in twenty twenty four,
Speaker 1: mainly in Asia across the board, the investment bank has
Speaker 1: been closed and asset management the same. So as I
Speaker 1: just mentioned, we are hiring both in China, but broadly
Speaker 1: speaking also in Asia. In Japan, for example, we've been
Speaker 1: expanding our capabilities and leveraging really the complementarity of credits
Speaker 1: and ubs together, where we not only have a broader
Speaker 1: footprint in terms of capabilities, but also of geographic footprint.
Speaker 2: How would you assess how your businesses in Asia are
Speaker 2: doing versus other regions, whether it's Europe or well.
Speaker 3: Look, Asia has been growing.
Speaker 1: Very fast in the last It is probably the biggest
Speaker 1: engine of growth in nominal terms, is accounting for around
Speaker 1: a quarter to thirty percent on average in the last
Speaker 1: five years of our profits. So, as I mentioned, we
Speaker 1: manage more than a trillion of assets out of the
Speaker 1: seven trillion we manage globally.
Speaker 3: So it's a.
Speaker 1: Growing, steady, growing business, which when you look at the
Speaker 1: engine of growth is well GDP growth is definitely going
Speaker 1: to help four and a half percent in China is
Speaker 1: quite important, but is a driver for growth in the
Speaker 1: entire region.
Speaker 3: We are selectively gaining some market.
Speaker 1: Shares in areas where we want to compete and last
Speaker 1: but not least, this monetization, this IPO calendar is very
Speaker 1: important to our wealth management business because it's really helping
Speaker 1: us to drive menu money and manu assets into our
Speaker 1: wealth management frontis well.
Speaker 2: Speaking of that IPO pipeline in Hong Kong, it's been
Speaker 2: quite strong a lot of the new economy companies, but
Speaker 2: there are also concerns of the new economy companies, whether
Speaker 2: it's minimags or others, that profitability, just like the AI
Speaker 2: companies in the United States and Western markets, that sustainability
Speaker 2: is not necessarily it doesn't have a lot of visibility.
Speaker 2: But what's your views on whether we're in a bubble
Speaker 2: and how long that potentially could still last.
Speaker 3: I don't know if we're in a bubble or not.
Speaker 1: But of course when you see this kind of multiples
Speaker 1: and performances, you have to ask yourself, is this a
Speaker 1: repeat of what we saw maybe in other time two
Speaker 1: thousand and one exactly the TMT bubble, and so on
Speaker 1: and so forth. I would say that in general, you know,
Speaker 1: first of all, our advice is very clear diversification, no
Speaker 1: concentration of risk around the sector the technology and is
Speaker 1: here to stay.
Speaker 3: But we should not really mix the two issues.
Speaker 1: From an investors standpoint of view, it's very important to diversify,
Speaker 1: not to get into a trap of trying to pick
Speaker 1: up the right the winner or the loser.
Speaker 3: And but you know, the true of the matter.
Speaker 1: Is that the first wave was probably around the technology sector.
Speaker 1: Now we're going to see how embracing and implementing AI
Speaker 1: can help other parts of the economy become more vibrant
Speaker 1: and more efficient, and that's probably.
Speaker 3: Going to be also the next side of the story.
Speaker 2: You also have to you can't discount the fact that
Speaker 2: most of the deal flows right now are in China.
Speaker 2: The interest is in these new economy companies, So kind
Speaker 2: of quantify the type of deal flows, whether it's underwriting
Speaker 2: or other types of businesses or services from the near
Speaker 2: bank that are tied directly to what has been a
Speaker 2: priority of central government policymakers.
Speaker 3: Here. Look, you know, but this is something that is
Speaker 3: not really new.
Speaker 1: I mean, the priorities for the central government around innovation
Speaker 1: being in technology or or or pharma, biotech and so
Speaker 1: on has been there for a while. So from our
Speaker 1: standpoint of view, what we are helping is in you know,
Speaker 1: local clients but also foreign clients to really select the winners.
Speaker 3: I think is quite impressive how.
Speaker 1: The Chinese companies are able not only to be a
Speaker 1: fast followers, but in some cases setting new standards for
Speaker 1: incumbents in in the US. So from my stand point
Speaker 1: of view, this is a big story to stay with us.
Speaker 3: We're we're going.
Speaker 1: To see probably Chinese companies, you know, creating new frontiers
Speaker 1: of innovation rather than being a follower.
Speaker 2: You've mentioned Japan twice already in the last six or
Speaker 2: seven minutes. What do you like about the Japanese story
Speaker 2: right now? Obviously that the market's doing really well, there
Speaker 2: are some pro growth policies from taki Ichisa on the
Speaker 2: new Prime minister. What in particular do you like about
Speaker 2: Japan Well, I.
Speaker 1: Have to say before Urend I was in Japan and
Speaker 1: after thirty years of you know, I fell for the
Speaker 1: first time a renewed sense of optimism across the board
Speaker 1: and you know, corporate, institutional investor, governments, regulatory bodies looking
Speaker 1: in a much more positive ways about the future. So
Speaker 1: I think Japan is the third largest wealth management market
Speaker 1: in the world in terms of savings.
Speaker 3: And it's quite clear to me.
Speaker 1: That now that rates are coming up and you know,
Speaker 1: there is a new paradigm that is there to stay
Speaker 1: with us, and I do believe that also there you
Speaker 1: will see Japanese corporates probably looking to deploy more.
Speaker 3: Assets outside Japan.
Speaker 1: But also a renewed interest from foreign investors into Japan.
Speaker 2: Where specifically would you like to grow in Japan and
Speaker 2: what kind of hiring you were talking about maybe one
Speaker 2: hundred new physicians here in China, what about Japan.
Speaker 1: Well, across the board in our core businesses, I mean
Speaker 1: outside outside Switzerland, I mean the fact of the three
Speaker 1: core activities the you know, in weals management, we have
Speaker 1: a very successful joint venture with Sulutoo and suit Trust Bank,
Speaker 1: and that is growing and we want to foster more
Speaker 1: in the investment bank of course, in the investment banking
Speaker 1: in E C, M and M and A uh, you know,
Speaker 1: reinforcing our presence iniquities and in research where we are
Speaker 1: a leader in generally in Asia and GLASTPO not list
Speaker 1: in the asset managementalysis.
Speaker 2: Let's talk about the overall integration with Credit Sweez. You
Speaker 2: mentioned that in this part of the world and in
Speaker 2: China that integration pretty much was completed last year, and
Speaker 2: you've also said to us, I think in September that
Speaker 2: the overall integration will be completed by the end of
Speaker 2: this current calendar first quarter.
Speaker 3: What are the biggest hurdles to overcome right now?
Speaker 2: AI, You know it integration is going to be a
Speaker 2: big one, but also there's going to be some personnel
Speaker 2: issues that you have to resolve as you go through
Speaker 2: that costco.
Speaker 1: So what we're going to do around by the end
Speaker 1: of this first quarter, we're going to migrate the balance
Speaker 1: of around fifteen percent of the clients in Switzerland into
Speaker 1: the UBS platform. At that point in time, all clients
Speaker 1: globally will be on our UBS system, right on our
Speaker 1: UBS platform. Then we're going to start to shut down
Speaker 1: IT centers, data centers, and you know the Act.
Speaker 3: In Switzerland, we are still you know, we are still
Speaker 3: maintaining and running two separate IT.
Speaker 1: Systems, so shutting down that one will create the synergies,
Speaker 1: real estate footprint and to some.
Speaker 3: Extent, unfortunately, also some personnel reduction that.
Speaker 1: Will continue to stay within what we announced in terms
Speaker 1: of product if redundancy.
Speaker 3: We believe we're going to manage that below.
Speaker 1: Three thousand redundancies between now and the early part of
Speaker 1: twenty twenty seven.
Speaker 3: And where do we stand.
Speaker 2: Do you have any kind of update right now what
Speaker 2: the Bank's perspective is on of course the two big
Speaker 2: defail regulation and some of the proposals from the Swiss
Speaker 2: government as far as capital requirements.
Speaker 1: Well, this is really unimportant steps together with finishing the integration.
Speaker 3: I think that I just mentioned, you know.
Speaker 1: The process of completing the integration and finalizing this very
Speaker 1: big work because of course that is also painful because
Speaker 1: as I mentioned, we need to take also go through redundancies.
Speaker 1: But what we want to set is the scene for growth,
Speaker 1: to be able to you.
Speaker 3: Know, to hire again and growth. And in that sense, in.
Speaker 1: Order to be able to growth, we have we need
Speaker 1: a competitive regulatory framework and what we we fully understand
Speaker 1: the necessity of taking the lessons learned from what happened
Speaker 1: at Credit Suis. But we believe that the current proposals
Speaker 1: are not really reflecting.
Speaker 3: What happened at Crety Suis and are going too far.
Speaker 1: And therefore we are contributing in the debate with our
Speaker 1: views on the matter.
Speaker 3: And but this is now a political process.
Speaker 1: We hope we're going to get more clarity in the
Speaker 1: second by the second half of the.
Speaker 2: Year, second half of the year, other compromises that you
Speaker 2: would potentially accept, and that conditions of doing business, is
Speaker 2: it a hindrance obviously to be is still domiciled in Switzerland.
Speaker 1: Look, you know, first of all, there is a compromise
Speaker 1: is usually between two people, you know, negotiating something.
Speaker 3: We are not in a negotiation.
Speaker 1: Is a political process and therefore we need to see
Speaker 1: what's coming out. As I said, our role right now
Speaker 1: is to make sure on behalf of our shareholders, our employees,
Speaker 1: our clients and in general to the public that we
Speaker 1: contribute our views on the matter.
Speaker 3: But you know, we want.
Speaker 1: We are we are a Swiss bank. We are very
Speaker 1: proud to be a Swiss bank. Is a we believe
Speaker 1: that is a is a.
Speaker 3: Is a differentiating factor.
Speaker 1: We believe this is good for Switzerland and we want
Speaker 1: to continue to operate as a Swiss bank are going forward.
Speaker 2: So it's not necessarily a compromise because as you said,
Speaker 2: that would be a negotiation, right, But are you confident
Speaker 2: that they will come up and there will be a
Speaker 2: resolution that will be acceptable.
Speaker 3: I cannot be confident about that. I think that.
Speaker 4: I'm pleased to see that there is a political interest
Speaker 4: to go deeper and fully understand the details of this.
Speaker 3: It's very important to understand.
Speaker 1: The details of what's going on, so such an important
Speaker 1: decision cannot be taken out of emotions.
Speaker 3: Or by people trying to drive the agenda by fear.
Speaker 2: How would you What are your opportunities do you see
Speaker 2: in the United States? Obviously your chairman has doctor Scott
Speaker 2: Beason and those massive market rumors that was possibly about
Speaker 2: discussing moving to the United States. But we also know
Speaker 2: that mister Kelliher wants to post a wealth management in
Speaker 2: the United States.
Speaker 3: What are the opportunities there?
Speaker 1: Well, First of all, I have to say we are
Speaker 1: in a regular dialogue with many key stakeholders around the
Speaker 1: world in governments, regulatory framework. Regularly is nothing exceptional when
Speaker 1: we speak with one or the other officials. But of
Speaker 1: course the US, together with this region and China are
Speaker 1: likely to continue to be two engines of growth. It's
Speaker 1: very important for us to continue to be competitive and
Speaker 1: present in the US like we want to continue to
Speaker 1: be strong in Asia and in our own country, Switzerland.
Speaker 2: Sergio Ramali, thanks so much for your time and having
Speaker 2: us here at the GCC twenty twenty six.