Speaker 1: Bloomberg Audio Studios, podcasts, radio news. After a good set
Speaker 1: of quarterly results, what are you most proud of?
Speaker 2: Well, first of all, I'm proud that we made very
Speaker 2: good progress in the integration, and so we significantly now
Speaker 2: reduce the risk of the integration itself. And we did
Speaker 2: that while les staying close to clients deliver very good
Speaker 2: financial results, which makes me comfortable.
Speaker 3: That we are on a good way to deliver on
Speaker 3: our twenty twenty six financial targets.
Speaker 2: Of course, it's going to take a lot of time
Speaker 2: to restore the profitability because the amount of task to
Speaker 2: be done is huge, but I'm confident that we are
Speaker 2: on a good way to deliver.
Speaker 1: There's always this overhang about the capital requirements that regulators
Speaker 1: are talking about. You've been very vocal about it. How
Speaker 1: do you see it playing out?
Speaker 2: Well, OK, we started technical discussions with all interested parties.
Speaker 2: We will see how it comes out. I think that
Speaker 2: we are all for making the system more resilient, more safe.
Speaker 2: On the other end, we have to recognize that the
Speaker 2: current system has served us well, so so much that
Speaker 2: we were able to step in and rescue Credit Swiss,
Speaker 2: so we need to look at the lessons learned from
Speaker 2: this crisis, but also on the other end, we need
Speaker 2: to ensure that the outcome is proportionate and is also
Speaker 2: one that allows us to continue to be a driver
Speaker 2: of growth and well being for the Swiss economy.
Speaker 1: So your biggest concern, I mean, at any point, could
Speaker 1: it touch dividend or shareholder buybacks?
Speaker 3: I don't think this will happen.
Speaker 2: I think that in any case, it's premature to speculate
Speaker 2: on the outcome.
Speaker 1: I know that there's a number of ways, of course,
Speaker 1: of dealing with this if something big were to happen
Speaker 1: in the space. One of them is probably a sort
Speaker 1: deals our regulators have they given you agree light on them.
Speaker 2: Well, look, you know, I don't think this is srt
Speaker 2: R something that can be used in a focus and
Speaker 2: selective way to manage economic risk and not to manage
Speaker 2: a regulatory capital issues per se.
Speaker 3: So in that sense, I don't think it's a solution.
Speaker 1: What is there a solution that you're looking at to
Speaker 1: kind of minimize the impact on UBS.
Speaker 2: I think it's premature to speculate because we don't know
Speaker 2: really the outcome of the discussions. We will find out
Speaker 2: probably late this year, early part of twenty twenty five
Speaker 2: the direction of travel and then we can make an assessment.
Speaker 1: Serger, talk to me a little bit about wealth management.
Speaker 1: So there's been a number of high profile people. Iball,
Speaker 1: for example, is moving to Asia. What's your biggest hope
Speaker 1: for wealth and in what region?
Speaker 3: Well, Iqbal has moved to Asia with his family. So
Speaker 3: I think we continue.
Speaker 2: To see Asia, China and the US as a big
Speaker 2: driver of growth. They are very important elements of our strategy,
Speaker 2: together with our position in Switzerland as a leading universal bank.
Speaker 2: And we you so also in the second quarter results.
Speaker 3: But overall that.
Speaker 2: Asia continues to be a pretty good secular driver of
Speaker 2: growth for our business.
Speaker 1: What about the US?
Speaker 2: The US we are I'm glad we are making good
Speaker 2: progress with some initiatives to make the A, B and
Speaker 2: wealth management working closer together. This has helped our transaction
Speaker 2: activities in wealth management. We are also preparing the platform
Speaker 2: to institutionalize more of our client relationships. So and now
Speaker 2: with the new leadership team with Rob Kurowski, we are
Speaker 2: really preparing for the next phase.
Speaker 3: Of our plans.
Speaker 2: And I'm confident and that we will improve our results
Speaker 2: in the US in the foreseeable.
Speaker 1: Future quite quickly.
Speaker 4: How aggrossive do you want to be in the US internmal,
Speaker 4: I think we have a plan and we set our
Speaker 4: plan that we believe we need to get to meet
Speaker 4: teams protect profit margins in the next two or three years,
Speaker 4: and then from their own words, we will look at ways.
Speaker 3: To improve further. But it takes time to do that,
Speaker 3: you know. Of course, the environment is not really favorable.
Speaker 2: We need to do things with sustainability in mind, and
Speaker 2: not just to him to do quick wins.
Speaker 1: I mean, are you looking at potential acquisitions or will
Speaker 1: most of everything will be so organic?
Speaker 4: Now?
Speaker 2: We have to we have to do our own work
Speaker 2: and fix the issues we need to fix and.
Speaker 3: And leverage better the capabilities we have.
Speaker 2: Right now, and they are enough driver of growth and
Speaker 2: for us in the foreseeable future.
Speaker 1: Do you see any M and A on the cards
Speaker 1: you ready to acquire even something small?
Speaker 2: You're quite busy with MNA right now, so it's difficult
Speaker 2: for us to think about M and A.
Speaker 3: So I think that we have enough on our plate.
Speaker 1: Yeah, that's fair, Serge. When you look at the week
Speaker 1: that was, it was pretty volatile or actually pretty extraordinary
Speaker 1: for markets. I don't know whether we still understand fully
Speaker 1: the underlying reasons, But has it changed the way that
Speaker 1: you see the markets in the next six months.
Speaker 2: Not dramatically, but I think, I guess for the markets
Speaker 2: and for many investors, what happened early on this month
Speaker 2: has been a a wake up called right, So, I mean,
Speaker 2: you look at the magnitude of the movements should make
Speaker 2: people think carefully about having a proper diversification and being
Speaker 2: very thoughtful about the way you invest money. So in
Speaker 2: that sense, the fact that we have basically made back
Speaker 2: everything in one week or two cannot be taken as
Speaker 2: a you know, temporary issues. In my point of view,
Speaker 2: one has to really think that probably is a sign
Speaker 2: of some elements of fragility in the system.
Speaker 1: Does it get easier as maybe we get a FED cut,
Speaker 1: or does it get more complicated as we go to
Speaker 1: the US election?
Speaker 3: But look, you know.
Speaker 2: When central bank cuts, it depends how they cut and
Speaker 2: why they cut. So if you know, of course there
Speaker 2: is now capacity probably to accommodate cuts based on lower inflation,
Speaker 2: but it's also you know, we need to watch exactly
Speaker 2: also what are the underlying economic drivers and to the
Speaker 2: extent that the FED is forced to cut more aggressively
Speaker 2: because of economic downturns. That would not really be good
Speaker 2: for the market. So we need to really watch why
Speaker 2: rates would come down and how quickly they come down.
Speaker 2: In general, we do expect and we see room for
Speaker 2: a potential raid cuts in the foreseable future. But I
Speaker 2: wouldn't really be in the camp of predicting that the
Speaker 2: FED will go as far as the market.
Speaker 3: Wants the FED to go. Why is that well, because.
Speaker 2: I think that probably the market is used to see
Speaker 2: central banks stepping in every time and being very accommodative
Speaker 2: in the previous cycles, and I think right now is
Speaker 2: quite clear that central banks are focused also on inflation,
Speaker 2: and therefore they don't have so much capacity to go
Speaker 2: as far as the market may want to see.
Speaker 1: Is the US election during the game in town? I mean,
Speaker 1: it could change depending on who's in the White House,
Speaker 1: regulation for banks, it could change even central bank independence,
Speaker 1: tear of trade wars.
Speaker 2: Yeah, look, yes, but if US election would be the
Speaker 2: only game in town, we would be in a pretty
Speaker 2: good place in the world.
Speaker 3: So I think that.
Speaker 2: Administration changes every four years or so, and that we
Speaker 2: are used to do that to see that. So I
Speaker 2: think that unfortunately we have many other problems, particularly geopolitically
Speaker 2: humanitarian issues we have across the ward. So I think that,
Speaker 2: of course you have to expect a little bit of
Speaker 2: volatility around the upcoming election in the US, but it's
Speaker 2: you know, it's not gonna it's not going to resolve
Speaker 2: all the issues that we have on the plate right now.
Speaker 3: But I'm confident that you know we are for us.
Speaker 2: I mean, we have a business model that has been
Speaker 2: able to be to show resilience and actually success even
Speaker 2: in a moment of stress.
Speaker 3: And that's the most important issue for us.
Speaker 1: So you're telling me what the world is changing because
Speaker 1: of these poly crises? Is that fair? And what does
Speaker 1: it mean for a bank like UBS, Well, it.
Speaker 2: Means that the necessity for us to stay close to
Speaker 2: clients and continue to advise and as I mentioned before,
Speaker 2: they've helped them to diversify and manage the risk. It's
Speaker 2: crucial and that's the reason I believe that in those
Speaker 2: moments we are seen as a safe event, as a
Speaker 2: place to go for advice, and I'm glad that our
Speaker 2: people are doing that while also absorbing a huge task
Speaker 2: of integrating credit suite. So and I believe we are
Speaker 2: ready for that kind of environment.
Speaker 1: Do you think it's also changing client behavior? There's been
Speaker 1: a lot of focus on private markets. How does that
Speaker 1: interplay actually change and what does it mean for ubs now?
Speaker 2: The big change in client behaviors we saw in the
Speaker 2: last twenty four months was clearly more diversification towards fixed
Speaker 2: income and so on and so forth. When the rates
Speaker 2: comes down, of course, maybe part of it will go
Speaker 2: to search for higher yield and maybe in private credit,
Speaker 2: but not only. But we do believe that as rates
Speaker 2: come comes down, you will see also potentially people moving
Speaker 2: back to more alternative assets.
Speaker 3: And also, which is important to.
Speaker 2: Understand the ed winds we face in the industry, but
Speaker 2: also at ups in NII in margins on interest rates
Speaker 2: will be also upset by clients taking more leverage potentially.
Speaker 2: So it depends how it plays out.
Speaker 3: It depends what are the underlying economic dynamics.
Speaker 1: Do you worry that there could be a systemic risk
Speaker 1: for semi systemic risks?
Speaker 3: I don't think so. No, I don't think systems. I
Speaker 3: don't see systemic risk.
Speaker 2: But volatility high volatilelyy doesn't mean that you have systemic risks.
Speaker 1: But what does it mean high volatility means.
Speaker 2: You need to have higher volatility. I mean to be honest,
Speaker 2: I think if you look at high volatility can be
Speaker 2: an absolute or a relative concept. So because we have
Speaker 2: seen solo volatility in the last few quarters, you know,
Speaker 2: I do believe we see higher volatility. If this is
Speaker 2: very high and permanently, it's another matter. But I do
Speaker 2: believe we're going to see more volatility.
Speaker 1: So it can be quarterally results. If I don't ask
Speaker 1: you about hiring or actually job losses, can you give
Speaker 1: us an update on what the next six and then
Speaker 1: twelve months will bring.
Speaker 2: Well? You saw that, you know, the restructuring and fixing
Speaker 2: the elements of problems in the integration are unfortunately driving
Speaker 2: job losses. We are we took down around three thousand
Speaker 2: counties quarters, so I think that we will continue to
Speaker 2: do that in order to restore the profitability UBS had
Speaker 2: before the appeisition.