Sergio Ermotti: Thank you, Stefan. No. I am — I think the link between share buyback and the parent bank merger and the underlying U.S. operation and later on the Swiss one, it’s very relevant. Because if we have a delay, our ability to start to deliver on the cost synergies will come just later, and therefore, we would lose capital buffers that we believe is necessary. So I think there is no gaming or nothing, it’s just a prudent, reasonable way to look at the two major risks associated with such an integration is regulatory approvals to execute legal entity mergers. We are talking about 50 plus countries, okay, and the second one is IT migration. This is probably more the 2024 into 2025 as we start to migrate. So if we don’t get into a good place with our parent company merger by the end of the second quarter, we have a delayed effect which has to be reflected in our prudence in terms of how we accrue capital.
So I hope this is very clear now. In terms of capital requirements, yeah, well, I mean, I can only say — watch and listen to what has been said publicly by different international and domestic experts around the topic of capital and why Credit Suisse failed. Credit Suisse didn’t fail because of lack of capital or lack of liquidity per se, but it failed because partially, I would say, the loss of trust and confidence, the lack of underlying profitability and that created a self-fulfilling problem. I think if you look at regulation, the regulation was well applied and fully functioning for UBS, so the same regulation should have worked for Credit Suisse. I do think that I’m pretty convinced that any authorities and governments before taking actions on capital, they will also have to sit down and look at what happened, like the commission that is investigating on the matter is doing and everybody will have to pose and think about what they could have done better, being a little bit more self-critical about what happened.
So I believe the current regime and no experts is saying that more capital is necessary. So I’m not going to give you an answer on my rating of confidence because there is only downside on that, but I can tell — I can only tell you that facts are telling us a crystal clear story that capital is not the way to manage such a situation.
Stefan Stalmann: Okay. Thank you very much.
Sarah Mackey: Thanks, Stefan. Now moving on to Adam Terelak, who’s calling in from Mediobanca. Adam Terelak, good morning.
Adam Terelak: Good morning. Thank you for the questions. I’ve got three on capital, one of which is a clarification. I wanted to dig into slide 36, the $15 billion of balance sheet optimization. Clearly, it’s talking about net of growth as well. So can we get a feeling for what the underlying moving parts are, because it’s clearly two going in different directions and whether there’s any kind of regulatory securitization type benefit to think about, so non-revenue costing, RWA efficiencies to think about on the forward look? And then linked to that, clearly the lower RWA outlook has created lots of flexibility in your plan. How do you guys think about redeploying your balance sheet if there are profitable growth opportunities, particularly given that your stock is trading above tangible book or CET1?
And then just a clarification on the $81 million build-out. It says increasing to 18% by 2029. I think you referenced 2026 as well in terms of that tier one capital requirements. If you just give us color on the $81 million build-out timeline, it would be very helpful? Thank you.
Todd Tuckner: So, let me — thanks for that, Adam. Let me just cover the last one is 2029, because that is how we’ve modelled. And also, just given the way our expectations are on the too big to fail requirements coming in, impacting on going concern capital out till 2030. So that is the correct read. In terms of the first question on slide 36, so the $510 billion, effectively, where we think we get to, of course, is net of growth. So there is growth that is priced in. So, the fact that we have, say, balance sheet optimization in the core businesses, we say net of growth. So this is trade-offs that we’re making, and look, we’ve done this before and it’s — taking the balance sheet and areas where there are opportunities to generate greater returns on RWA. That’s the work that we’re doing. And obviously, where there are opportunities to grow, especially to start to begin to harvest the combination and the scale that we have, clearly, that will be the case.
Sergio Ermotti: Yeah. I guess a 5% return on risk-weighted assets is not acceptable, right? So, I think, that’s the reason I’m saying, it makes no sense for us to try to overly impress anybody with growth on the topline if this is just destroying value or not sustainable. So we are willing to take a step back in terms of growth, but still, in some areas, are we going to grow? Now, it’s very important to understand the restructuring element up until the end of 2026. Afterwards, we will grow. Of course, we will grow. So, we are not a restructuring story. We will grow again because our business will grow, but from a base that I believe is going to be much more reliable and sustainable.
Adam Terelak: Can I follow up in terms of what volume of RWA are sitting below your aspiration in terms of RWA? Just trying to size the opportunity in terms of recycling your risk-weights into higher growth.
Sergio Ermotti: Well, you look at the balance sheet of Credit Suisse that we onboarded as revenues and risk-weighted assets of 5%. On average, in 2022 now, we are already taking actions, but this is the volume you have to think about. So we were perfectly happy with the return profiles of our Wealth Management and IB and Swiss Bank operations. So we need to now bring it back. And I think it’s very important that, it’s all about giving clear directions to our people, our new colleagues from Credit Suisse fully understand that. They are now following what they believe also is the best way to create value for clients, but also — for shareholders, but also for clients, because we want to be predictable. We want to be a partner that is there and where the relationship allows us to tell what are our expectations and what is the client’s expectations and that will need to be addressed and we now have a clear aligned way of looking at how to develop and grow the business.
Adam Terelak: Great. Thank you very much.
Sarah Mackey: And moving on to Ben Goy, who is joining us from Deutsche Bank. Ben, hi. Good morning. We can see you. Please do go ahead.
Ben Goy: Yes. Hi. Good morning. Two questions, please. One on Global Wealth Management, one on Investment Bank. Maybe you can add a bit more color on the $100 billion net new asset run rate that should rise to $200 billion per year by 2028. So just wondering how much is reduced impact from business exits or kind of risk appetite, financial advisor leaving and then how much is, say, acceleration of the platform of a unified platform? And then, secondly, sounds like the Credit Suisse Bank, as you onboarded, pretty low revenue so far. It’s picking up the next one year to two years. I was just wondering, because you mentioned for the markets position that it will be transferred end of Q1. Do you also feel that in sales and trading, the Credit Suisse colleagues you onboarded have been under-earning and whether they could see an acceleration this year? Thank you.
Todd Tuckner: Hi, Ben. So in terms of the run rate of net new assets from $100 billion, I would say, as Sergio just highlighted in response to the last question, we for sure will grow and once we feel like the balance sheet is in a better spot, we think that that will build quickly in terms of us focusing on growth. So the bridge to $200 billion, while we’re not disclosing specifically what we think the numbers are, you can expect that certainly in 2026, we should start to see that come up pretty significantly and then build to $200 billion by 2028. So I would say, it’s not necessarily just a linear straight line. We should see a bit of an acceleration early on in 2026. But I think there’s some hard yards that we have modelled in to get to the $200 billion in the latter part of that five-year cycle.
In terms of IB productivity on the market side, one of the key points that I highlighted was actually onboarding on the market side, fully onboarding not only the traders, but their positions, which is now, it’s been a 4Q, but really it’s an intense piece of work in 1Q, where we expect the majority of the positions to then be onboarded on UBS infrastructure. Once that happens, we think that the market’s personnel should be able to start generating appropriate revenues. Yes, there’s a ramp, but it’s not the same as on the banking side, where that productivity is going to take a longer ramp, as you might appreciate it. But we should see and we expect that we’ll see better productivity pretty quickly once the positions are onboarded on to the UBS infrastructure.
Ben Goy: Understood. Thank you.
Sarah Mackey: Thank you. And our next caller is Tom Hallett from KBW. Tom, good morning.
