March 29 (UPI) -- Switzerland's UBS said Wednesday that it was bringing back one of its own to deal with the challenges facing the banking giant following its $3.2 billion rescue of Credit Suisse 10 days ago.
UBS said it was bringing in former CEO Sergio Ermotti as Group CEO and president of the Group Executive Board to take the helm from Ralph Hamers who had agreed to step down in the interest of the newly formed bank, the Swiss Financial sector and the country.
"I am honored to be asked to lead this bank at a time that is so important for all its stakeholders and for Switzerland," Ermotti said. "I would like to express my gratitude to Ralph for steering UBS so successfully."
UBS shares fell to $19.55 at the open on the SIX Swiss Exchange before rebounding to $19.83, up 4% on Tuesday's close.
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Ermotti, who headed UBS from 2011 to 2020, is currently chairman of the reinsurance company, Swiss Re.
The bank said it had appointed Ermotti, credited as a steady pair of hands who successfully guided UBS in the wake of the global financial crisis "in the light of the new challenges and priorities facing UBS after the announcement of the [Credit Suisse] acquisition."
"He swiftly transformed the investment bank by cutting its footprint and achieved a profound culture change within the bank which allowed it to regain the trust of clients and other stakeholders, while restoring people's pride in working for UBS," the bank said.
"This unique experience, together with his deep understanding of the financial services industry in Switzerland and globally, make Sergio Ermotti ideally placed to pursue the integration of Credit Suisse."
UBS agreed to take over troubled rival Credit Suisse on March 19 in a $3.2 billion emergency deal brokered by Swiss regulators in a bid to stem further instability in the global banking industry.
The takeover, backed by a $55 billion central bank loan and the support of the government and the Financial Market Supervisory Authority, came after confidence in Credit Suisse plummeted following the collapse of Silicon Valley Bank and Signature Bank in the United States.
However, investors took a massive haircut with $17 billion worth of bonds written down to zero while shareholders in Credit Suisse received just one UBS share for every 22.48 shares in Credit Suisse that they held.
"The task at hand is an urgent and challenging one," Ermotti said. "In order to do it in a sustainable and successful way and in the interest of all stakeholders involved, we need to thoughtfully and systematically assess all options."
Among the casualties of the takeover was key investor Saudi National Bank which confirmed that it had suffered a loss of around 80% of its $1.5 billion investment in Credit Suisse.
Chairman Ammar al-Khudairy, who set alarms bells ringing by publicly stating the bank was not prepared to put any more funds into Credit Suisse, resigned Monday.
