Exclusive-UBS CEO Ermotti May Stay Late Into 2027 Due to New Rules, Succession Gap, Sources Say

UBS CEO Ermotti May Extend Tenure to 2027 Due to Rules and Succession Gap

UBS Faces Leadership and Regulatory Challenges

By Oliver Hirt and Ariane Luthi

Potential Extension of Ermotti's Tenure

ZURICH, April 14 (Reuters) - Sergio Ermotti could stay as CEO well into the second half of 2027 to steer UBS through a regulatory overhaul and give the board more time to replace him, as an obvious internal successor has yet to emerge, people familiar with the matter said.

UBS not only wants more clarity on what capital demands the Swiss bank will face under new rules, but is also unsure if its potential internal successors to Ermotti are presently right for the job, two sources told Reuters.

UBS's board is increasingly open to having an external successor take on Ermotti's mantle, one of the sources and a third person familiar with the deliberations said.

UBS, which holds its annual shareholder meeting on Wednesday, declined to comment.

Reuters could not establish if any preferred external candidates have emerged. No decision has been taken on the CEO succession and UBS is unlikely to rush it, the sources added.

Ermotti’s Preferences and Board Considerations

Ermotti, who was also UBS CEO from 2011 to 2020, has repeatedly expressed his preference for an internal successor and last month said he would remain in charge until at least April 2027, while leaving open the possibility of staying on longer.

If he does so, it gives UBS more time to develop its internal candidates or to find an external successor to a CEO who has led the bank for far longer than anyone else since the modern financial group took shape after a 1998 merger.

Chairmanship Option and Swiss Regulatory Requirements

Succession and Nationality Requirements

CHAIRMANSHIP OPTION 

UBS wants at least one of the top two jobs to be a Swiss citizen, the sources said, adding that Ermotti, who returned as CEO in 2023 to oversee UBS's integration of its fallen rival Credit Suisse, is ready to assume the chairmanship of the bank.

Regulatory Cooling-Off Period

The Swiss financial regulator generally demands a cooling-off period of at least 12 months when a CEO becomes chair, but a CEO may move directly onto the board before that, FINMA said.

Ermotti, a 65-year-old Swiss national, has pledged to stay on until the Credit Suisse integration is complete, a date UBS once projected could be as soon as late 2026 or early next year.

Impact of New Rules on UBS Strategy

But tougher rules Swiss authorities vowed to introduce for banks after Credit Suisse's collapse have been a major bone of contention, with UBS seeking to moderate measures it sees as a threat to its competitiveness.

Those rules could make UBS hold up to $22 billion in extra capital, but it remains unclear how strict they will be.

Board's Approach to Regulatory Uncertainty

Despite signs the initial government proposals may be softened, the bank's board wants the matter settled before the next CEO starts, one of the sources said.

If the measures prove too severe, UBS will need to step up contingency planning, including the possibility of moving its headquarters abroad, Reuters reported this month.

Strategic Considerations for UBS’s Future

While UBS insists it wishes to remain Swiss, people familiar with its thinking say it is watching U.S. steps to deregulate banking in particular, and that the United States could be an option if Switzerland is no longer deemed viable.

Any such strategic shift would influence the bank's CEO choice, the sources said.    

(Reporting by Oliver Hirt and Ariane Luthi; Editing by Dave Graham and Alexander Smith)