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UBS has made Sergio Ermotti Europe’s best-paid bank head less than a year after he returned to the lender, saying the Swiss executive had successfully steered the integration of rival Credit Suisse.
Ermotti was paid a total of SFr14.4mn ($15.9mn) last year, the bank’s annual report said on Thursday, higher than the SFr12.6mn received by his predecessor Ralph Hamers in 2022.
Ermotti was parachuted back into the top job — a role he previously had for nine years — just weeks after UBS agreed to rescue Credit Suisse last March. Since then, the bank’s share price has climbed 60 per cent.
His remuneration exceeds the €12.2mn ($13.2mn) received by Santander executive chair Ana Botin and the £10.6mn ($13.4mn) paid to HSBC chief executive Noel Quinn, whose package nearly doubled thanks to a maturing long-term incentive plan.
In a statement on Thursday, the UBS board said the pay award was in recognition of Ermotti’s “excellent performance in a defining year in UBS’s history and strong progress in delivering on integration priorities”.
The award comes as the bank’s bonus pool shrank by 14 per cent compared with the combined pool at UBS and Credit Suisse in 2022. It fell despite UBS paying $736mn in retention awards to some Credit Suisse staff to stay on after the takeover.
The fall echoes a wider drop across the banking sector as dealmaking dried up.
In a letter to shareholders accompanying UBS’s annual report, Ermotti and chair Colm Kelleher hit out at critics of the bank’s size and capital requirements ahead of moves by the Swiss government to shore up the country’s banking system.
The lender has come under scrutiny within Switzerland following its rescue of Credit Suisse, especially over the size of the combined group’s balance sheet — roughly twice the country’s gross domestic product.
The Swiss central bank recently called on regulators to review UBS’s capital requirements in light of its increased “systemic importance”.
In the letter, Kelleher and Ermotti said Credit Suisse failed due to a “broken business model” rather than a lack of capital.
“The fact that we were in a position to rescue Credit Suisse, despite both firms operating under the same regulatory regime, shows the framework and capital requirements were not the problem,” they wrote.
The pair also responded to criticism that the size of UBS within the Swiss market has harmed competition.
“The collapse of Credit Suisse unleashed an extraordinary race for clients, talent and market share in the Swiss banking market,” they wrote. “This is the ultimate proof that the competition provided by both domestic and foreign banks active in Switzerland is robust.”
The Swiss parliament is carrying out an investigation into the collapse of Credit Suisse, which will result in recommendations for improving the stability of the banking system. There is also a separate government review of the country’s “too-big-to-fail” regime, which is designed to safeguard important banks from collapse.
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