20 Years of UBS

By Axel A. Weber, Chairman, UBS, and Sergio P. Ermotti, Group CEO, UBS

Anyone in a position of responsibility in an organisation must take account of the past, while at the same time looking ahead to the future. UBS is no different.

We want to – and must – be aware of the motivations of the founders of the firm and its more than 150 year history, while at the same time preparing the bank for the opportunities of   an increasingly digitalized and global world. When we look back today at the recent history of UBS, before we took up our posts, two dates stand out. One is 8 December 1997,exactly 20 years ago today, when Swiss Bank Corporation (SBV) and Union Bank of Switzerland (SBG) announced they were merging to form UBS.

Those responsible for the merger at the time were responding to the growing pace of globalization and increasing competition at home and abroad. They wanted to create "one of the world's leading financial services companies." The merger created "the world's largest wealth manager" and with its "leading position in Swiss retail and corporate banking" the new group "was perfectly placed to expand internationally."

Despite initial skepticism by many, the underlying idea proved right: the new bank grew rapidly, strengthening its presence in the US, Europe and Asia and soon delivered significant profits. The country and its citizens benefited as well: the bank became one of Switzerland's largest employers, a major consumer of local products and services and, over these last 20 years, paid about 13 billion francs in taxes alone to the federal government, cantons and local municipalities – 3.5 billion of which were after the financial crisis.

Which leads us on to the second date: on 16 October 2008, the Federal Council and the Swiss National Bank announced that they had to take various measures to rescue UBS. The bank was already under pressure because of the tax dispute with the US, and had brought itself to the brink through its dealings in American mortgage-backed securities. UBS was certainly not the only firm facing severe difficulties. The culture of the early years of the century was focused on growth at all cost, as the US government promoted prosperity and homes for all. Many market players did not see or ignored the risks.

The crisis at UBS also damaged Switzerland's image. In its 2010 transparency report to shareholders, UBS explained: "If a major corporation with global reach stumbles, this damages not only its own reputation but also that of its home market." This, the report concluded, was also the case for UBS.

Only drastic measures by governments and regulatory authorities around the world prevented a collapse of the financial system. The Swiss authorities also acted with far-sighted decisiveness: The rescue of UBS was not without risk, but because the bank was not sitting primarily on "junk", but mainly on non-liquid assets, the state and the central bank were eventually able to withdraw from the operation with a positive result.

UBS is still extremely grateful to those in charge at the time for their courageous and decisive action.

They helped ensure that a financial institution built up over 150 years and the know-how of its employees were not simply lost, but could be used for the future. UBS to this day remains one of the largest employers in Switzerland, a leading consumer of products and services and a major taxpayer. The crucial thing after a crisis is whether you question your actions, or just relapse into old habits. For a time after its low point in 2008, UBS focused on righting the ship and could not concentrate fully on these fundamental questions. And in the years following the initial stabilization, suffered another setback that necessitated far-reaching changes.

The bank took decisive action: it adopted a strategy of sustainable growth aligned with the new regulatory reality. Healthy growth in areas where the bank had always been strong became the primary goal.

At the heart of our strategy is the original DNA of the firm: its Swiss universal bank and globally leading wealth manager. The Investment Bank and Asset Management remain key pieces to the overall client value proposition, globally competitive in their chosen areas of focus and highly capital efficient. In addition, the approach of the firm is also no longer based solely on what results are achieved, but also on how those results are achieved. 

We have stuck to this strategy at UBS without wavering for the past six years. The goal is to lead the bank down a path of stable and sustainable growth. To date this seems to have been successful and has brought the firm closer to its roots.

We are back to what Swiss banks excelled at 150 years ago: long-term, but innovative banking, focused on customers. Only that today we do this not only in Switzerland but globally. And this is essential, as future growth will be driven primarily from UBS's strong position in Asia, including China, and the US.

Digitalization and sustainability as well as a continued focus on quality will continue to shape our business, which is why we are investing heavily in these areas.

UBS is driving innovative projects for the financial sector in the new digital universe – in Switzerland and internationally. We are committed to digitalization for three reasons: to make the customer experience simpler, more satisfying and keep it secure; to offer attractive and more varied products; and to be more efficient and effective. As it did 150 years ago, doing business responsibly also means doing business sustainably.

Our customers and shareholders are striving for this just like we are. For example, UBS is already one of the leaders in sustainable investing and further expanding its capabilities in this segment. We're e not the only ones who thinks this matters. UBS was named the leader among financial services companies by the Dow Jones Sustainability Index for the third time in a row this year.

In the face of ongoing challenges, we see a strong and exciting future for UBS. The bank is well positioned for future success. It's our desire to achieve the best for our clients, employees and shareholders, and to do so sustainably and securely.

That's what UBS stands for.

This commentary was published also on in German on NZZ, in French on Le Temps and in Italian on Corriere del Ticino.