UBS CEO Says Credit Suisse Already Had Problems in 2015: "Something Wasn't Going Well"

UBS Group AG UBS CEO Sergio Ermotti recently shared his thoughts on troubled Credit Suisse Group AG CS, saying that the latter bank has stabilized and that he did not think outflows at the embattled bank were continuing.

In an interview with the German newspaper Schweiz am Wochenende, however, Ermotti revealed that Credit Suisse had been going through a rough patch as early as 2015.

"We always looked at opportunities for us to grow organically and inorganically. It was clear that something wasn't going well at Credit Suisse," Ermotti said. 

"It is crystal clear [that] this situation at Credit Suisse didn't develop in the last six weeks or months, but in the last six, seven years," Ermotti said. "The task now is to implement the integration quickly. Outgoing CEO Ulrich Koerner knows Credit Suisse very well."

"Credit Suisse had no liquidity problem up to 72 hours before the weekend in question. It was a trust and credibility issue because Credit Suisse was no longer profitable. Profitability and trust cannot be regulated," the UBS CEO added. 

Also Read: UBS Acquisition of Credit Suisse: Bye Bye AT1 Investors, Anxiety Builds Among Banks' Subordinated Bondholders

Ermotti also explained that the Swiss government and central bank would avoid taking a financial hit from the emergency rescue. 

"I don't think the merger of UBS and Credit Suisse will create a bank that is too big for Switzerland," he told the newspaper. "Switzerland cannot be one of the world's leading financial centers if it only has medium-sized banks. This merger strengthens Switzerland," he added.

The UBS CEO said that all options are on the table for Credit Suisse's domestic bank but rejected the idea that the latter must be spun off. 

"I hope that, when there will be an investigation, it should be long enough to understand everything that happened properly," Ermotti said. 

Last month, Credit Suisse reported Q1 FY23 earnings. The bank posted a profit of CHF 12.43 billion for Q1 of 2023. The gain resulted from the write-off of AT1 bonds worth CHF 15 billion, which was part of the bank's deal with UBS. 

Credit Suisse saw CHF 61.2 billion — 5% of the group's assets under management — withdrawn in the first quarter alone.

Read Next: Switzerland To The Rescue: Swiss National Bank, FINMA Ready To Provide Liquidity Support For Credit Suisse

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