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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. After a good set

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Speaker 1: of quarterly results, what are you most proud of?

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Speaker 2: Well, first of all, I'm proud that we made very

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Speaker 2: good progress in the integration, and so we significantly now

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Speaker 2: reduce the risk of the integration itself. And we did

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Speaker 2: that while les staying close to clients deliver very good

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Speaker 2: financial results, which makes me comfortable.

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Speaker 3: That we are on a good way to deliver on

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Speaker 3: our twenty twenty six financial targets.

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Speaker 2: Of course, it's going to take a lot of time

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Speaker 2: to restore the profitability because the amount of task to

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Speaker 2: be done is huge, but I'm confident that we are

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Speaker 2: on a good way to deliver.

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Speaker 1: There's always this overhang about the capital requirements that regulators

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Speaker 1: are talking about. You've been very vocal about it. How

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Speaker 1: do you see it playing out?

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Speaker 2: Well, OK, we started technical discussions with all interested parties.

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Speaker 2: We will see how it comes out. I think that

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Speaker 2: we are all for making the system more resilient, more safe.

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Speaker 2: On the other end, we have to recognize that the

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Speaker 2: current system has served us well, so so much that

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Speaker 2: we were able to step in and rescue Credit Swiss,

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Speaker 2: so we need to look at the lessons learned from

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Speaker 2: this crisis, but also on the other end, we need

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Speaker 2: to ensure that the outcome is proportionate and is also

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Speaker 2: one that allows us to continue to be a driver

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Speaker 2: of growth and well being for the Swiss economy.

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Speaker 1: So your biggest concern, I mean, at any point, could

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Speaker 1: it touch dividend or shareholder buybacks?

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Speaker 3: I don't think this will happen.

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Speaker 2: I think that in any case, it's premature to speculate

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Speaker 2: on the outcome.

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Speaker 1: I know that there's a number of ways, of course,

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Speaker 1: of dealing with this if something big were to happen

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Speaker 1: in the space. One of them is probably a sort

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Speaker 1: deals our regulators have they given you agree light on them.

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Speaker 2: Well, look, you know, I don't think this is srt

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Speaker 2: R something that can be used in a focus and

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Speaker 2: selective way to manage economic risk and not to manage

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Speaker 2: a regulatory capital issues per se.

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Speaker 3: So in that sense, I don't think it's a solution.

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Speaker 1: What is there a solution that you're looking at to

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Speaker 1: kind of minimize the impact on UBS.

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Speaker 2: I think it's premature to speculate because we don't know

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Speaker 2: really the outcome of the discussions. We will find out

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Speaker 2: probably late this year, early part of twenty twenty five

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Speaker 2: the direction of travel and then we can make an assessment.

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Speaker 1: Serger, talk to me a little bit about wealth management.

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Speaker 1: So there's been a number of high profile people. Iball,

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Speaker 1: for example, is moving to Asia. What's your biggest hope

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Speaker 1: for wealth and in what region?

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Speaker 3: Well, Iqbal has moved to Asia with his family. So

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Speaker 3: I think we continue.

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Speaker 2: To see Asia, China and the US as a big

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Speaker 2: driver of growth. They are very important elements of our strategy,

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Speaker 2: together with our position in Switzerland as a leading universal bank.

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Speaker 2: And we you so also in the second quarter results.

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Speaker 3: But overall that.

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Speaker 2: Asia continues to be a pretty good secular driver of

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Speaker 2: growth for our business.

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Speaker 1: What about the US?

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Speaker 2: The US we are I'm glad we are making good

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Speaker 2: progress with some initiatives to make the A, B and

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Speaker 2: wealth management working closer together. This has helped our transaction

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Speaker 2: activities in wealth management. We are also preparing the platform

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Speaker 2: to institutionalize more of our client relationships. So and now

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Speaker 2: with the new leadership team with Rob Kurowski, we are

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Speaker 2: really preparing for the next phase.

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Speaker 3: Of our plans.

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Speaker 2: And I'm confident and that we will improve our results

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Speaker 2: in the US in the foreseeable.

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Speaker 1: Future quite quickly.

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Speaker 4: How aggrossive do you want to be in the US internmal,

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Speaker 4: I think we have a plan and we set our

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Speaker 4: plan that we believe we need to get to meet

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Speaker 4: teams protect profit margins in the next two or three years,

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Speaker 4: and then from their own words, we will look at ways.

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Speaker 3: To improve further. But it takes time to do that,

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Speaker 3: you know. Of course, the environment is not really favorable.

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Speaker 2: We need to do things with sustainability in mind, and

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Speaker 2: not just to him to do quick wins.

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Speaker 1: I mean, are you looking at potential acquisitions or will

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Speaker 1: most of everything will be so organic?

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Speaker 4: Now?

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Speaker 2: We have to we have to do our own work

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Speaker 2: and fix the issues we need to fix and.

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Speaker 3: And leverage better the capabilities we have.

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Speaker 2: Right now, and they are enough driver of growth and

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Speaker 2: for us in the foreseeable future.

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Speaker 1: Do you see any M and A on the cards

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Speaker 1: you ready to acquire even something small?

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Speaker 2: You're quite busy with MNA right now, so it's difficult

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Speaker 2: for us to think about M and A.

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Speaker 3: So I think that we have enough on our plate.

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Speaker 1: Yeah, that's fair, Serge. When you look at the week

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Speaker 1: that was, it was pretty volatile or actually pretty extraordinary

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Speaker 1: for markets. I don't know whether we still understand fully

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Speaker 1: the underlying reasons, But has it changed the way that

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Speaker 1: you see the markets in the next six months.

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Speaker 2: Not dramatically, but I think, I guess for the markets

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Speaker 2: and for many investors, what happened early on this month

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Speaker 2: has been a a wake up called right, So, I mean,

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Speaker 2: you look at the magnitude of the movements should make

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Speaker 2: people think carefully about having a proper diversification and being

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Speaker 2: very thoughtful about the way you invest money. So in

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Speaker 2: that sense, the fact that we have basically made back

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Speaker 2: everything in one week or two cannot be taken as

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Speaker 2: a you know, temporary issues. In my point of view,

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Speaker 2: one has to really think that probably is a sign

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Speaker 2: of some elements of fragility in the system.

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Speaker 1: Does it get easier as maybe we get a FED cut,

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Speaker 1: or does it get more complicated as we go to

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Speaker 1: the US election?

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Speaker 3: But look, you know.

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Speaker 2: When central bank cuts, it depends how they cut and

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Speaker 2: why they cut. So if you know, of course there

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Speaker 2: is now capacity probably to accommodate cuts based on lower inflation,

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Speaker 2: but it's also you know, we need to watch exactly

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Speaker 2: also what are the underlying economic drivers and to the

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Speaker 2: extent that the FED is forced to cut more aggressively

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Speaker 2: because of economic downturns. That would not really be good

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Speaker 2: for the market. So we need to really watch why

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Speaker 2: rates would come down and how quickly they come down.

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Speaker 2: In general, we do expect and we see room for

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Speaker 2: a potential raid cuts in the foreseable future. But I

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Speaker 2: wouldn't really be in the camp of predicting that the

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Speaker 2: FED will go as far as the market.

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Speaker 3: Wants the FED to go. Why is that well, because.

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Speaker 2: I think that probably the market is used to see

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Speaker 2: central banks stepping in every time and being very accommodative

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Speaker 2: in the previous cycles, and I think right now is

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Speaker 2: quite clear that central banks are focused also on inflation,

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Speaker 2: and therefore they don't have so much capacity to go

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Speaker 2: as far as the market may want to see.

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Speaker 1: Is the US election during the game in town? I mean,

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Speaker 1: it could change depending on who's in the White House,

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Speaker 1: regulation for banks, it could change even central bank independence,

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Speaker 1: tear of trade wars.

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Speaker 2: Yeah, look, yes, but if US election would be the

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Speaker 2: only game in town, we would be in a pretty

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Speaker 2: good place in the world.

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Speaker 3: So I think that.

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Speaker 2: Administration changes every four years or so, and that we

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Speaker 2: are used to do that to see that. So I

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Speaker 2: think that unfortunately we have many other problems, particularly geopolitically

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Speaker 2: humanitarian issues we have across the ward. So I think that,

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Speaker 2: of course you have to expect a little bit of

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Speaker 2: volatility around the upcoming election in the US, but it's

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Speaker 2: you know, it's not gonna it's not going to resolve

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Speaker 2: all the issues that we have on the plate right now.

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Speaker 3: But I'm confident that you know we are for us.

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Speaker 2: I mean, we have a business model that has been

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Speaker 2: able to be to show resilience and actually success even

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Speaker 2: in a moment of stress.

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Speaker 3: And that's the most important issue for us.

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Speaker 1: So you're telling me what the world is changing because

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Speaker 1: of these poly crises? Is that fair? And what does

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Speaker 1: it mean for a bank like UBS, Well, it.

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Speaker 2: Means that the necessity for us to stay close to

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Speaker 2: clients and continue to advise and as I mentioned before,

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Speaker 2: they've helped them to diversify and manage the risk. It's

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Speaker 2: crucial and that's the reason I believe that in those

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Speaker 2: moments we are seen as a safe event, as a

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Speaker 2: place to go for advice, and I'm glad that our

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Speaker 2: people are doing that while also absorbing a huge task

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Speaker 2: of integrating credit suite. So and I believe we are

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Speaker 2: ready for that kind of environment.

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Speaker 1: Do you think it's also changing client behavior? There's been

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Speaker 1: a lot of focus on private markets. How does that

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Speaker 1: interplay actually change and what does it mean for ubs now?

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Speaker 2: The big change in client behaviors we saw in the

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Speaker 2: last twenty four months was clearly more diversification towards fixed

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Speaker 2: income and so on and so forth. When the rates

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Speaker 2: comes down, of course, maybe part of it will go

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Speaker 2: to search for higher yield and maybe in private credit,

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Speaker 2: but not only. But we do believe that as rates

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Speaker 2: come comes down, you will see also potentially people moving

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Speaker 2: back to more alternative assets.

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Speaker 3: And also, which is important to.

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Speaker 2: Understand the ed winds we face in the industry, but

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Speaker 2: also at ups in NII in margins on interest rates

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Speaker 2: will be also upset by clients taking more leverage potentially.

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Speaker 2: So it depends how it plays out.

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Speaker 3: It depends what are the underlying economic dynamics.

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Speaker 1: Do you worry that there could be a systemic risk

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Speaker 1: for semi systemic risks?

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Speaker 3: I don't think so. No, I don't think systems. I

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Speaker 3: don't see systemic risk.

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Speaker 2: But volatility high volatilelyy doesn't mean that you have systemic risks.

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Speaker 1: But what does it mean high volatility means.

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Speaker 2: You need to have higher volatility. I mean to be honest,

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Speaker 2: I think if you look at high volatility can be

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Speaker 2: an absolute or a relative concept. So because we have

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Speaker 2: seen solo volatility in the last few quarters, you know,

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Speaker 2: I do believe we see higher volatility. If this is

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Speaker 2: very high and permanently, it's another matter. But I do

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Speaker 2: believe we're going to see more volatility.

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Speaker 1: So it can be quarterally results. If I don't ask

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Speaker 1: you about hiring or actually job losses, can you give

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Speaker 1: us an update on what the next six and then

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Speaker 1: twelve months will bring.

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Speaker 2: Well? You saw that, you know, the restructuring and fixing

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Speaker 2: the elements of problems in the integration are unfortunately driving

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Speaker 2: job losses. We are we took down around three thousand

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Speaker 2: counties quarters, so I think that we will continue to

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Speaker 2: do that in order to restore the profitability UBS had

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Speaker 2: before the appeisition.