Ermotti Says EU Bank Deals Shouldn’t Fail Over National Interest

This content was published on October 30, 2024 - 08:51

2 minutes

(Bloomberg) — Europe’s banking market is in need of consolidation and narrow political preferences shouldn’t stand in the way, UBS Group AG Chief Executive Officer Sergio Ermotti said.

It would be a “very bad chapter for Europe” if a deal were to fail because of “national interest,” Ermotti said Wednesday on Bloomberg TV. He wasn’t commenting on specific situations, he said.

Banking M&A in Europe could get a boost as Italy-based UniCredit SpA is considering an acquisition of Germany’s Commerzbank AG. However, the German government has said it doesn’t want the potential transaction to go ahead. At least one Italian government official, Deputy Prime Minister Matteo Salvini, has said he would be against moving UniCredit’s headquarters to Germany if that were to be proposed.

Ermotti has previously stressed the importance of bank mergers in Europe. Switzerland is not part of the European Union and UBS is still in the process of integrating domestic rival Credit Suisse, which it bought last year.

UBS on Wednesday reported third-quarter results that broadly beat expectations, with net income almost double of what analysts had forecast.

“It’s very difficult for banks to sustain the economy, to sustain all the investment needed to go through the reforms necessary for Europe to flourish again,” Ermotti said in the interview. “We don’t have a capital markets union, so we need at least a banking union that makes banks stronger.”

He declined to elaborate on earlier remarks by Chairman Colm Kelleher that the bank will eventually look to buy a wealth management firm in the US.

“Right now, we are very focused on leveraging what we have in the US,” Ermotti said in the interview. “Our goal is to narrow the gap in terms of profitability compared to our peers.”

Ermotti highlighted next week’s US elections as a key source of uncertainty. On China, he said that the stimulus measures unveiled by the government so far are “probably just the beginning of a long path” of state support for the economy.

–With assistance from Noele Illien.