Dear Insider,
The king of Paradeplatz is back.
On Wednesday morning, UBS announced the return of former CEO Sergio Ermotti to his old post at the top of the most powerful bank in Switzerland.
It came as a surprise - and yet not really…
In the week since the Credit Suisse merger (or takeover, buyout….whatever term you prefer…) - speculation and political intrigue had threatened to produce chaos.
International media continued to snigger at Switzerland and its tiny financial center (now ranked only 22nd in the world).
Bloombergs Businessweek featured a requiem for Swiss banking.
None of this is a laughing matter…
(But some things are worth laughing about - check out the special video section at the end of this edition of The Swiss Insider)
Quick hits:
🤴Return of the King
The move was kept secret until the right moment. In contrast to the constant leaks from Credit Suisse, UBS and Chair Kelleher imposed strict discipline with the announcement of Sergio Ermotti’s return as CEO.
The news was reported first in Swiss media. The press conference at the UBS Grünenhof complex in downtown Zürich was polished. Many commentators described Ermotti and Kelleher as “statesmen” and “grave” in view of the task. Outgoing CEO Ralph Hamers, on the other hand looked relieved…
⏱Tick-tock
With the topic of “mergers” being in vogue, the Swiss Federal Council announced this week that it was restarting treaty negotiations with the European Union.
After abruptly abandoning the so-called “framework” approach two years ago in the face of domestic political pressure, Switzerland now seeks to find a way to package existing piecemeal treaties into something more solid. Time seems to be of the essence.
👴Task of a lifetime
Pensions are often a hot political topic. The state-sponsored AHV system in Switzerland is no exception.
To deal with an ongoing budget deficit, Finance Minister Karin Keller-Sutter plans to propose cuts in the federal contribution to the AHV system of CHF 150 million per year for the next 5 years. To the minds of many people, the numbers do not add up.
💡The Point:
👉The call to Sergio Ermotti went out on the day after UBS’s takeover was announced. Ralph Hammers’s stumbling performance in an analyst call on Sunday evening was the last straw.
The task of merging UBS and Credit Suisse is no laughing matter. Getting Credit Suisse for a song, may make Colm Kelleher feel good, but this moment in time is of historical significance. Seriousness and discipline will be needed. And jobs will need to be cut and hard decisions made.
On a larger scale, it was clear that a Swiss CEO would be needed to navigate the coming months. Without a Swiss man (or woman) at the top - there is no Swiss financial center.
👉Lost amid the war in Ukraine, the covid pandemic and now the Credit Suisse scandal, EU relations are also no laughing matter.
New Federal Councilor Albert Rösti, minister for infrastructure, environment and energy, warned this week not to expect a comprehensive energy agreement with the EU any time soon. If lights get turned off and businesses cannot operate, Switzerland will look (and feel) like a joke.
👉Far-right politicians - and not only - are laughing at Finance Minister Keller-Sutter for proposing AHV cuts just as she offers billions to save Credit Suisse. But neither topic is fun to deal with.
But the budget problems precede the current crisis on Paradeplatz. Billions were used to support the Swiss economy during covid. More have been needed in other areas as well. FDP may be targeting AHV in favor of encouraging more private saving and investment for retirement. It is a potentially dangerous tactic with elections coming up…
💡The Insider Advantage:
Switzerland’s consensus-based mentality often brings derision from outside. When Foreign Minister Ignazio Cassis was forced to go to Brussels and call off EU negotiations, many laughed at him.
The implication is clear: a democracy so direct, with no strong leaders, can’t get anywhere fast.
The Credit Suisse takeover, however, has shown that in emergency situations, deals can be done quickly. And in the face of a crisis, such audacity underscores the gravity of the situation and unites…usually…
To avoid looking like a joke, sometimes it is better to make a bold move and seize the moment. Against the backdrop of langsamkeit as it usually unfolds in Switzerland, such strong moves may provoke outrage.
But when they come as exceptions, rather than the rule, they win respect.
The return of Sergio Ermotti is one such moment. The deal that brought UBS and Credit Suisse together was another.
Colm Kelleher and Karin Keller-Sutter are for real.
All jokes aside…
➕The Bonus:
🍫Nestlé numbers - World-famous for its far-reaching foodstuffs empire, Nestlé has recently admitted that most of its products are not so healthy. (Link)
🌊Receding wave - The Liberal Green Party was a big winner in the last parliamentary elections, but their wave may be disappearing. (Link)
🧐No signs of sexism? - Media personality and former moderator Patrizia Laeri recently accused state media outlet SRF of sexual misconduct. Now SRF says it has found no evidence of the charges. (Link)
😃Laughing matters
In the face of negative press and internal conflict, Switzerland could use some cheering up. Swiss tourism - which rebounded nicely after the pandemic - got another boost recently. Comedian Trevor Noah. Noah, who is half Swiss, joined Swiss Tourism ambassador Roger Federer in a comical sketch shot at Zürich Hauptbahnhof.
The new TV spot comes just as some people in Switzerland are calling for a more proactive communications campaign to beat back the onslaught of negativity generated by the demise of Credit Suisse.
Behind the scenes
And a special look at the making of the latest promo with commentary from the two protagonists themselves.