(Bloomberg) -- Swiss regulators favored UBS Group AG’s decision to bring back Sergio Ermotti as chief executive officer to ensure a smooth integration of the bank’s recent takeover of rival Credit Suisse Group AG, people familiar with the talks said.

Government officials indicated their preference for appointing a Swiss banking heavyweight to run the combined bank during the weekend when the rescue deal was negotiated, according to the people, who asked not to be identified because the discussions weren’t public. Ermotti will take over from current CEO Ralph Hamers on April 5, UBS said in a statement on Wednesday. 

Ermotti, who ran UBS from 2011 to 2020 and is currently the chairman of reinsurer Swiss Re, had emerged as a possible candidate to run the combined entity during the fast-paced negotiations for the government-orchestrated deal for Credit Suisse, according to people with knowledge of the matter.

UBS Chairman Colm Kelleher, in response to questions about whether the Swiss government and regulators were involved in Ermotti’s selection, said at a press conference that it was the board’s responsibility to appoint executive leadership and that regulators had approved of Ermotti. “The regulatory input into this was after the event,” he said on Wednesday, “after the board had made its decision.”

“This story is categorically untrue,” Kelleher said in a subsequent statement. “The board decided on the chief executive change without influence from or interaction with regulators.”

Kelleher made a call to Ermotti on March 20, the day after the acquisition was announced, to explore the possibility of bringing him back to UBS. While Ermotti’s Swiss citizenship is a “nice thing,” the color of the passport did not determine the choice of CEO, given that the majority of UBS’s business is actually outside of Switzerland, added Kelleher, who is Irish. 

In choosing Ermotti, Kelleher said the board “felt we had a better horse” for the next phase of UBS in integrating the complicated transaction and “Sergio would be the preferred executioner of that.” Ermotti had already led UBS through a major transformation in his first stint, while Hamers came in with little investment banking background. 


A spokesperson for Switzerland’s central bank declined to comment. A representative for Finma said on Thursday that the regulator had no influence in UBS’s CEO change, and played its usual role of addressing the question of fitness and properness for management appointments.

Swiss companies have typically been encouraged to keep a Swiss native as a top executive or key board member. Ermotti’s return restores that to the highest level at the nation’s now megabank. 

UBS’s deal to acquire Credit Suisse for 3 billion Swiss francs included 200 billion Swiss francs in liquidity lifelines from the Swiss central bank and a 9 billion franc government back-stop on potential losses it might incur from winding down unwanted risky assets. 

Ermotti, 62, left UBS Group AG in 2020 after about nine years in the role of chief executive officer. In a four-decade career he also worked at UniCredit SpA and Merrill Lynch. 

--With assistance from Marion Halftermeyer and Myriam Balezou.

(Adds Finma response in the eighth paragraph.)

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