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UBS has named Sergio Ermotti as Europe's highest-paid head of its bank less than a year after returning to the bank, saying the Swiss executive had successfully steered the merger of rival Credit Suisse.
Ermotti earned a total of 14.4 million Swiss francs ($15.9 million) last year, higher than the 12.6 million Swiss francs his predecessor Ralph Hammers received in 2022, the bank's annual report said Thursday.
Ermotti was parachuted back into the top job — a role he previously held for nine years — just weeks after UBS agreed to bail out Credit Suisse last March. Since then, the bank's share price has risen by 60 percent.
His pay exceeds the 12.2 million euros ($13.2 million) received by Ana Botin, CEO of Santander, and the 10.6 million pounds ($13.4 million) paid to HSBC CEO Noel Quinn, whose package has almost doubled thanks to a long-term incentive plan. Mature.
In a statement on Thursday, UBS's 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 achieving integration priorities.”
The award comes as the bank's bonus pool shrank by 14 percent compared to the combined pool at UBS and Credit Suisse in 2022. It fell despite UBS paying $736 million in retention bonuses to some Credit Suisse employees to remain in their positions after the takeover.
The decline reflects a broader decline in the banking sector as dealmaking dries up.
In a letter to shareholders accompanying UBS's annual report, Ermotti and Chairman Colm Kelleher blasted critics of the bank's size and capital requirements ahead of the Swiss government's moves to shore up the country's banking system.
The lender has come under scrutiny within Switzerland after its rescue of Credit Suisse, particularly over the size of the combined group's balance sheet – nearly double the country's gross domestic product.
The Swiss central bank recently called on regulators to review UBS's capital requirements in light of its increasing “systemic importance”.
In the letter, Kelleher and Ermotti said Credit Suisse failed because of a “broken business model” and not because of a lack of capital.
“The fact that we were in a position to rescue Credit Suisse, even though the two companies operated under the same regulatory regime, shows that the framework and capital requirements were not the issue,” they wrote.
The pair also responded to criticism that UBS's size within the Swiss market hurt 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 conclusive proof that the competition offered by local and foreign banks operating in Switzerland is strong.”
The Swiss parliament is conducting an investigation into the collapse of Credit Suisse, which will lead to recommendations to improve the stability of the banking system. There is also a separate government review of the “too big to fail” system, which is designed to protect important banks from collapse.
