Transcription
In 2009, the U.S. Justice Department made a shocking accusation. UBS was complicit in the largest offshore tax evasion scheme in history. Well, in today's corporate news, federal prosecutors are investigating 150 Americans who may have used Swiss bank UBS to aid them in tax evasion. For decades, UBS sold secrecy as a service, catering to oligarchs, CEOs, and criminals alike. But when the pressure from Washington mounted, Switzerland was forced to choose between sovereignty and survival. What followed wasn't just a scandal. It was a reckoning. Now, UBS has agreed to hand over the names of nearly 4,500 account holders to the U.S. government and it's looking to be a game changer for Swiss banks. For over a century, Swiss banking meant silence, neutrality, and secrecy. But UBS turned discretion into dominance, rising from local custodian to global kingmaker. In essence, bank secrecy is analogous to criminal racketeering and the Swiss government, along with every Swiss private banker, is a co-conspirator. Swiss executives knew that UBS's cross-border business violated the law. They refused to stop this activity. The reason was money. The business was too profitable to give up. By his latest act of naked aggression, Hitler has committed a crime not only against Poland, but against the whole human race. In 1939, Hitler invades Poland. Europe plunges into war. Entire nations collapse in weeks, and a new kind of terror begins to spread across the continent. Switzerland, surrounded by Axis powers, declares neutrality. But in a war built on conquest and extermination, neutrality isn't safety. It's a risk. As cities burn and borders vanish, Switzerland becomes a refuge. Not just for people, but for money. Afraid of losing everything, aristocrats, businessmen, and persecuted minorities rush to protect their wealth. Even before the 1900s, banking secrecy was normal in Switzerland. The country's neutrality, laws, and quiet culture made it a safe place for Europe as elites, kings, and rich families. Swiss banks built their reputation not just to manage money, but on keeping it hidden. Gold, cash, and bearer bonds flood into Swiss vaults. Numbered accounts rise. What began as a business model, bank secrecy, now becomes a shield. Thanks to its laws and location, Switzerland becomes the last safe vault in Europe. But not all deposits are fleeing tyranny. Some are funding it.
In the early 1940s, a key player emerges. The Union Bank of Switzerland, UBS. The predecessor of UBS was founded back in the 1860s, and at the time it had grown from a local bank into one of the most important banks in Switzerland. As the war rages, UBS shifts roles. It doesn't just handle money. He moves it, hides it, and cleans it. During his conquests, Hitler needs to find a partner to help store and clean the looted gold. Switzerland with its secretive banking laws and neutral stance is the perfect partner. UBS accepts gold from Nazi Germany. It melts it down, stamps it with neutral markings, then puts it back into circulation, laundering stolen wealth into clean, usable bullion. And they know what they're doing. An internal UBS report shows that by 1940, the bank is securing Jewish assets in military bunkers, even as it processes gold taken from Jews sent to death camps. These were not small operations. Between 1939 and 1945, Switzerland's central bank, the S&B, purchased over $400 million worth of gold from Nazi Germany. It was one-third of the Reichsbank's total sales. "Victorious Russian troops walk through the rubble where the Nazis made their last stand." World War II ends with Europe in ruins. But Switzerland is almost untouched. Its cities are safe, its money is stable, and its banks are full. Thanks to years of foreign deposits during the chaos. "Switzerland stayed out of the fighting, but stayed useful to both sides. They made deals, stayed neutral, and kept their banks safe."
Between 1956 and 1975, UBS rapidly expands by buying up smaller banks across the country, quietly becoming Switzerland's biggest financial power. UBS took advantage of Switzerland's neutrality. During the Cold War, people sent their money there to keep it safe from political chaos and sanctions. UBS used that reputation to attract rich clients from around the world. In 1960, the banking giant makes its boldest move yet. It acquires Argoor SA, the country's top gold refinery. Argoor gives UBS something few banks ever possess. Vertical control over the flow of gold. "In global finance, gold isn't just a commodity. It's a foundation asset. The more physical gold you hold, the more trust you command. But refining, that's a different level. For UBS, acquiring Argoor wasn't just vertical integration. It was a move to institutionalize control over gold itself." By the 1970s, Zurich has passed London as the world's top gold trading hub. And UBS is at the center of it all. But no one rules forever. In banking, trust is everything. The collapse can come overnight. As the 1990s approach, UBS will face a reckoning.
By the late 1980s, UBS appoints Robert Studer as its new CEO. Studer is a disciplined, cautious insider, rising through the bank since the 1960s. "He was not a Wall Street shark, nor a political power broker. Studer was a military-trained technician. He believed in systems, in process, in consensus." Prior to becoming CEO, Studer spent years working in different countries. First in New York, then in Beirut, where he promoted a Palestinian deputy to a top role. An unusual move in the region. Now at the top, Studer sees the future clearly. "If UBS wants to compete globally, it must grow. Fast. That means breaking old habits and building a new kind of bank." So he started building a different kind of management system. Breaking the bank into regional banks, and each with its own CEO. Studer hopes that this design can create agility without losing control. But little does he know, his matrix of leadership will doom UBS for good. For a bank that has weathered wars and crises for nearly a century, the collapse will come faster and harder than anyone expects.
The first sign of trouble comes from an unlikely place. In the mid-1990s, UBS is trying to modernize. One of its rising stars is Ramy Goldstein, an Israeli-American trader known for his brilliance with numbers. Goldstein specializes in complex options and convertible bond arbitrage, particularly in the Japanese market. His trades are exotic, long dated, and built on intricate models that few others inside UBS fully understood. But on paper, they make money. A lot of it. But behind the numbers was a problem. The risk was mispriced and grossly underestimated. Goldstein's desk booked profits based on internal models, not market prices. And the positions were effectively unhedged. This was possible because UBS management structure was weak. Studer has split the bank into regions and product lines. No one above Goldstein had both the authority and the knowledge to stop him. Risk managers raises concerns, but the fragmented reporting structure rendered them powerless. Goldstein works in a gray zone, bringing in profits free from oversight. His desk becomes a black box. No one questions it. It's a disaster waiting to happen. But for now, Studer's biggest threat isn't inside the bank. It's coming from the outside, from a man with no title, no office, and no loyalty to the old ways. His name is Martin Ebner, and he's about to flip UBS upside down.
In the early 1990s, while UBS executives stay buried in charts and cautious restructures, a new kind of threat emerges. Martin Ebner. Ebner is a financier turned activist investor. He runs BZ Bank and a powerful investment vehicle called BK Vision. He was a corporate raider. In Switzerland's polite, conservative world of banking, he was something altogether different. Loud, aggressive, unapologetically capitalist. He believed in results. And by 1991, he started buying up shares in UBS. Not to profit quietly, but to force a revolution. And soon he becomes the largest UBS individual shareholder and earns a seat at the board. UBS was getting fatter, not faster. Between 1989 and 1995, costs exploded by 60%, but profits lagged far behind. The bank was burning money just to stay in place. To Ebner, UBS isn't just a bank. It's a sleeping giant, bloated, slow, and blind to a rapidly changing world. And he knows one man is to blame. Robert Studer. A battle for control of Switzerland's largest financial institution, the Union Bank of Switzerland, has entered a new stage, causing a loss of confidence in the bank and leaving investors with paper losses of $6 billion. The attack of Martin Ebner is bad news for Robert Studer.
For months, UBS CEO Robert Studer ignores Ebner. Believing he's just making noise. Loud, persistent, but not truly dangerous. But then Ebner drops a bomb. He makes a shocking proposal to UBS shareholders. UBS should merge with Credit Suisse. Credit Suisse is UBS's biggest rival. Smaller, faster, and already expanding overseas. In the 90s, Credit Suisse is a big one. In the 90s, Credit Suisse was ahead of the curve, especially in trading and investment banking. They built a world-class derivatives desk and were expanding aggressively into New York and London. While UBS focused on traditional Swiss banking, Credit Suisse was chasing global markets, hiring top talent, and taking smart risks. They looked modern. UBS looked slow. Inside the industry, everyone saw it. Credit Suisse was the future. UBS just couldn't admit it. Joining forces would mean throwing out UBS's longstanding approach to banking. For Studer, it would be an open admission that his strategy no longer works. And worse, it could mean the end of his reign at the top. The Union Bank of Switzerland declined today to pursue merger discussions with rival CS Holding, the financial services company that operates Credit Suisse and CS First Boston, saying that such a combination into one of the largest banks in the world would strain financial and management resources.
Ebner doesn't get his merger, but he gets something else. He exposes weakness of Robert Studer. To the UBS board, Studer's silence, his refusal to respond to counter, to lead, speaks volumes. By 1996, the decision is made. Robert Studer is quietly removed as CEO. He stays on as chairman, but his influence is fading. In his place, UBS names a younger successor. Mathis Cabiallavetta, a new face for a bank under pressure to change. Mathis Cabiallavetta was a trained economist who studied at the University of Lausanne. He had spent most of his career working at UBS, moving up quickly through the private banking and securities divisions. By the mid-1990s, he was seen as the kind of leader UBS needed. A younger, modern face who could transform the bank's image and calm the rising pressure from activist investor Martin Ebner. In 1996, when Cabialavetta becomes president of UBS, he acts fast. He begins pushing the bank to compete on the global stage, expanding aggressively into securities and trading. But to truly leave a mark, he needs more than reform. He needs a game changer. And soon, Cabialavetta lands on just the move he needs. A high-stakes merger with Swiss Bank Corporation, UBS's most formidable rival. SBC based in Basel is smaller. Fewer people, fewer branches, but it's hungrier, more profitable. And while UBS wrestles with itself, SBC is winning in new markets. Cabialavetta sees an opportunity. Combining UBS's vast wealth management empire with SBC's sharp trading edge could create a global superbank. For him, it's more than strategy, it's redemption. A chance to outmaneuver Ebner, reset UBS's image, and leave his mark.
The two Swiss executives who will run the world's second largest bank were all smiles in New York yesterday, as they began a day of meetings to talk up their new creation, the United Bank of Switzerland. In the 90s, it was almost a fad. Banks everywhere were merging. Everyone wanted scale. But most of those mergers didn't make strategic sense. But just as the deal nears the finish line, a time bomb goes off. And it's been ticking inside UBS all along. [MUSIC PLAYING]
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In the mid-1990s, Ramy Goldstein runs UBS's Equity Derivatives Desk in London, a unit so complex, few at Zurich headquarters fully grasp how it works. But as long as the numbers look good, no one asks questions. Ramy Goldstein's team delivers steady profits on paper, and that's enough to keep Zurich silent. [MUSIC] These include options and bets on convertible bonds, especially in Japan, where markets were slow and interest rates were low. The trades look clever using price gaps between bonds and stocks, but were wrapped in complicated derivatives. Then the market turns. By late 1997, the Japanese equity market experiences unexpected shifts. Interest rate volatility ticks up, and the assumptions underlying Goldstein's positions begins to collapse. Losses mount rapidly. The models can no longer hide the exposures. In early 1998, UBS is forced to go public, with a 650 million Swiss franc loss, roughly 959 million in US dollars. Nearly all of it comes from Goldstein's desk. It's more than a financial shock. It's a reputational crisis. And with UBS on the brink of merging with Swiss bank corporation, this black swan doesn't just shake confidence, it threatens the entire deal.
By late 1997, merger talks between UBS and Swiss bank corporation are underway. For Mathis Cabiellaveta, it's the crown jewel of his strategy. A bold move to modernize UBS and silence its critics. But just as the deal nears completion in early 1998, disaster strikes, UBS reveals a 650 million Swiss franc loss from its London derivatives desk, trades tied to Ramy Goldstein. Overnight, the balance shifted. UBS, once the dominant force in Swiss banking, is now wounded, vulnerable. And for SBC, it's the moment they've been waiting for. By mid 1998, the merger is complete. But the outcome makes one thing clear. SBC's CEO, Marcel Ospel, assumes control of the new entity. UBS's CEO, Cabiellaveta, is out. On paper, it looked like a merger of equals. But in reality, SBC swallowed UBS, even though UBS was the bigger company. They kept the UBS name, but it was really an SBC firm. It was such a sad ending for UBS. The new UBS becomes the second largest bank in the world, behind only Citigroup. And Marcel Ospel stands at the top, ready to push UBS to number one. But what he doesn't see, what no one sees, is that UBS's past is about to come back to haunt them.
Time is running out for Switzerland and its banks to compensate elderly Holocaust survivors for the sickening profits Swiss institutions made from financing the Nazi war machine and holding on to funds deposited by Holocaust victims. Just as UBS begins to rise as a global financial powerhouse, the past resurfaces, and it hits hard. In the late 1990s, a long-hidden chapter of Swiss history starts to unravel. At the center is UBS and its role during World War II. Documents and investigations reveal that UBS, along with other major Swiss banks, accepted gold from Nazi Germany. Not just state reserves, but gold looted from occupied countries. In more disturbing cases, it includes personal items, jewelry, dental fillings, wedding bands, taken from Jewish victims in concentration camps. UBS hadn't merely accepted that gold. It had also ignored or shuttered thousands of dormant accounts, deposits made by Jewish families before the war, many of whom would never return from the camps. The World Jewish Congress is not just another advocacy group. It is an organization with legal power, diplomatic connections, and global influence. Based in New York, the WJC launches a coordinated campaign, lobbying U.S. lawmakers, threatening lawsuits, and driving media attention around the world. The pressure mounts. Executives are called to testify. Public hearings begin. Protests erupt outside UBS offices. Representatives of Swiss commercial banks and Holocaust survivors announced a settlement yesterday in which the banks agreed to pay $1.25 billion in restitution to victims of the Nazi era. It's one of the largest settlements of its kind. But for UBS, it's not just a financial penalty. It's not just a financial penalty. It's a public reckoning. The sins of the past had caught up with the bank, just as it tried to dominate the future. And the storm is only beginning.
UBS AG, Europe's biggest bank, announced today that it expected to report a third-quarter loss as high as one billion Swiss francs, currently $721.6 million, related to losses in emerging markets, equities, and the near collapse of long-term capital management, the American hedge fund. Inside the bank, a deep culture war takes hold. The old UBS and the aggressive SBC team have become incompatible. By the early 2000s, Ospel has spent more than 20 years inside UBS. He's tired, he's rich, and he's ready to step back. But what he leaves behind is fragile. UBS looks unified from the outside, but inside, it's on the verge of coming apart. One man is about to take the reins and try to hold it all together. His name is Peter Wuffli. Born in 1957 and educated at the University of St. Gallen, Peter Wuffli didn't come from Switzerland's old money banking class. He was trained at McKinsey, sharp, analytical, precise. When he joined UBS in the 1990s, he rose fast. By the end of the decade, he was Group CFO, the quiet force behind UBS's global push. Wuffli sees the bank's greatest strength, managing wealth for the richest people on earth. And in the early 2000s, he makes a bold move. UBS acquires Paine Webber for $11.5 billion. It was one of America's top brokerage firms. Overnight, UBS becomes one of the largest wealth managers in the world. The acquisition propels Wuffli to the top. In 2001, he becomes CEO. Over the next five years, he will turn UBS into a risk-loving, profit-seeking bank with international footprints everywhere. And his biggest source of revenue comes from trading, especially the mortgage-backed securities, a market that seems unstoppable at the time. Wuffli and his team wanted to copy Wall Street's success. A mortgage product seemed like the way to do it. And for a while, the money kept coming in. But beneath the surface, risk compounds. It hides in complex trades, opaque portfolios, and massive mortgage warehouses no one wants to inspect. This time, there's no rogue trader. The system itself is the risk. And Peter Wuffli, precise, disciplined, data-driven, is about to face a storm no model can contain.
By 2006, UBS looks unstoppable. With over $3 trillion in cash, with over $3 trillion under management, is the crown jewel of global wealth. Its investment bank dominates debt and equity underwriting. Its private banking division caters to billionaires on three continents. But then, everything collapses. Heavyweight French bank BNP Paribas froze withdrawals from three investment funds exposed to subprime mortgages in the US. The decision woke the world up to the dangers of the subprime market. Almost overnight, the empire Peter Wuffli has helped build begins to collapse. UBS bedded big on mortgage-backed securities and collateralized debt obligations. Billions flew into products believed to be safe. They aren't. What sold as sophisticated risk management turns out to be a fragile structure, propped up by subprime mortgages, complex credit derivatives, and blind faith in flawed models. When the US housing market crashes, those assets implode. UBS is forced to write down over $50 billion, more than any other bank in Europe. The bank was on the brink. Liquidity dried up, investors panicked. In Switzerland, fear spread that the nation's largest financial institution might collapse under its own weight, dragging the country's economy with it. With no good options left, the Swiss government steps in. By late 2008, UBS is in crisis. The Swiss government steps in with a $6 billion capital injection and moves $39 billion of toxic assets into a state-managed bailout fund. The Swiss authorities today moved belatedly to shore up their two biggest banks, taking a near 10% stake in UBS and forcing it and Credit Suisse to increase their capital base. For a bank that once symbolized strength and discretion, it was a public humiliation. UBS may have been bailed out by the government, but their catastrophic failure in 2008 will have ripple consequences that they cannot escape.
This time, the threat doesn't come from markets, rivals, or activist shareholders. It comes from a government with the power to expose UBS's deepest secrets, the United States. UBS AG, Switzerland's largest bank, has entered into a deferred prosecution agreement on charges of conspiring to defraud the United States by impeding the Internal Revenue Service, the Justice Department announced today. After the 2008 financial collapse, the mood in the United States shifts. As governments rush to stabilize markets and calm public outrage, Washington starts to target the rich Americans, many of whom hide wealth offshore. And no institution represents that secrecy more than UBS. For decades, UBS perfects the art of discretion. It builds a system designed to protect the world's wealthiest from scrutiny. Then that system cracks. Bradley Birkenfeld, a former UBS banker, walks into the U.S. Department of Justice and tells everything. When I put my concerns in writing to the UBS legal and compliance departments in Switzerland, they refused to address any of my concerns. I realized there was a cover-up of the corporation, and I was determined to contact the U.S. authorities to expose the scandal, which I did. He revealed that wealthy Americans were trying to hide millions from the IRS and were guided through complex offshore structures. UBS bankers were skilled in both secrecy and tax evasion, so they helped them open accounts in Switzerland that had no names, only identification codes. To further obscure ownership, they set up shell companies in jurisdictions like Panama, Liechtenstein, or the British Virgin Islands. These companies act as the legal account holders, insulating the client from direct association. And the secrecy runs deeper. UBS bankers are trained to avoid leaving paper trails. They fly into the U.S. on tourist visas, violating immigration law to discreetly meet clients in hotel lobbies or private events. They carry encrypted laptops, avoid emails, and rely on coded language and phone calls. Some clients receive Swiss-issued debit cards, allowing them to access offshore funds while appearing to use domestic accounts. Others are told to break large deposits into small transfers to avoid IRS reporting thresholds. It's deliberate, it's systematic, and it's profitable. UBS earns fees, loyalty, and prestige. Clients get what they want, privacy from the government, until one day it all falls apart.
In 2008, the Justice Department threatens to revoke the bank's license to operate in the United States. Behind the scenes, Swiss and American diplomats scramble to contain the fallout. Decades of carefully guarded secrecy now hang in the balance. By 2009, UBS gives in. The bank admits guilt, pays a $780 million fine, and, for the first time in Swiss banking history, agrees to hand over the names of more than 4,000 American clients. Swiss banking giant UBS AG has agreed to pay $780 million and identify certain U.S. clients in a deal to resolve criminal fraud charges that it assisted rich Americans to evade taxes. The consequences are immediate. Swiss lawmakers go into crisis mode. Bankers resign or flee. Thousands of clients withdraw their funds, fearing exposure. The old world of untouchable secrecy is over, and UBS is at the center of its collapse. It was truly catastrophic. By cooperating with the U.S. government, the UBS gave up its greatest advantage. Secrecy. The strength of Swiss banking had always come from silence, discretion, and anonymity. But now, that was gone. Clients left, trust disappeared, and the world got the message. Not even the most secretive bank on Earth could keep your money safe anymore.
By 2011, UBS is struggling. Internally fractured, externally exposed, it needs more than a CEO. It needs a fixer. So, the bank hires Sergio Ermotti, a Swiss-born executive who is nothing like any of UBS's previous executives. Sergio Ermotti was born in 1960 in Lugano, in Switzerland's Italian-speaking south. He didn't attend the elite schools of Zurich or Geneva. Instead, he worked his way up, starting as an apprentice at a local bank, earning credentials while learning markets from the ground up. He spent years at Citibank and Merrill Lynch before rising to co-head UBS's investment bank, known for discipline, not showmanship. By the time he was named CEO in 2011, UBS was in crisis. It had just suffered a $2.3 billion loss from rogue trading, its second major scandal in three years. Public trust was collapsing, regulators were circling, the investment bank was bloated and reckless. Internally, morale was low, externally the brand was toxic. If Ermotti can't turn things around, UBS risks collapse, or a forced sale to lesser banks. He develops an ambitious plan to stabilize the bank, slashes the investment bank, re-orients around UBS's traditional strength, wealth management. But before his strategy could take hold, another crisis erupted, one that threatened to derail his entire plan.
On the 39th floor of UBS's Maranucci office, a 26-year-old trader named Tom Hayes is placing multi-million dollar bets on interest rates. Socially awkward but brilliant with numbers, Hayes has a secret weapon. He's not betting on where the market goes. He's quietly controlling it. Every day, a handful of big banks submitted estimates of what interest rate they'd have to pay to borrow money from each other. Those submissions were averaged to produce LIBOR, a benchmark used to set rates on everything from mortgages and credit cards to corporate loans and derivatives. But inside UBS, that number is a lie. Hayes bribes brokers, leans on colleagues, even jokes and chats. The manipulation works. For three years, Hayes and his inner circle nudge LIBOR by fractions like 0.01% or 0.02%. That sounds tiny. But with tens of billions in trades, each sliver means millions in profit. At its peak, LIBOR underpins more than $300 trillion in financial contracts, and behind the scenes, UBS is rigging it. In 2012, global regulators exposed the scheme. That was Alex Wilmot-Sittwell, former co-head of UBS's investment bank, giving testimony to a UK parliamentary hearing, in January this year, about LIBOR manipulation. Dozens of employees are implicated. Compliance systems fail. The culture, already fragile, proves toxic. UBS pays $1.5 billion in fines, one of the largest banking penalties in history. Tom Hayes, once the boy genius trader at the center of the LIBOR rigging scandal, is arrested, extradited, tried, and convicted. That UBS LIBOR scandal wasn't just a corporate misstep. For sharp traders, it was also a massive opportunity. A skilled trader could have exploited sudden volatility in forex pairs like EURUSD and GBPUSD triggered by the news. By anticipating central bank reactions or capital flight, they could ride massive intraday swings, driven by shakened market trust. In moments like these, great traders thrive, if they have the capital behind them. A prop trading firm gives skilled traders access to the firm's capital to trade. If you perform well and manage risk, you keep a large share of the profits, and the firm takes care of the funding. Fortress Capital Markets is a prop firm I co-founded with traders who helped build one of the most successful desks in the US. We back skilled traders with accounts, up to $150,000 to trade futures and forex. You perform. We fund. And you keep 90% of the profit. To kick things off, we are doing something very special for the FINAIUS community. We are giving away 10,000 accounts. If you got the edge, you have nothing to lose. Apply today and see if you are selected.
For Sergio Ermotti, the setback is monumental. Something his predecessor did is now affecting him deeply. The LIBOR scandal broke just months after he took over in 2011. He wasn't personally involved, but it damaged UBS across the board. But Ermotti doesn't give up. He knows that his vision, a smaller, safer, client-focused UBS, can still be realized. One that returns to its roots, not as a trading giant, but as a world leader in wealth management and private banking. He acts decisively, cuts thousands of jobs, closes weak trading desks, guts the bloated fixed income division. He enforces capital discipline, cleans up the balance sheet, and rebuilds trust, one client at a time. By 2018, UBS completes a quiet, decisive turnaround. Its investment bank is lean, risk is low, costs are controlled. UBS becomes the world's largest wealth manager, overseeing more than $2.4 trillion in assets. More importantly, it's profitable again, posting $4.9 billion in earnings as clients return and public trust rebuilds. Ermotti has done the improbable, a true turnaround. Not with flash, but with focus, by making UBS boring again. Stable, predictable, profitable. With his mission complete, Ermotti steps down in 2020. UBS Group AG Chief Executive Sergio Ermotti is stepping down and will be succeeded by Ralph Hammers in the latest leadership change at a major European bank. But Ermotti's retirement won't last, because soon another crisis will erupt. And once again, UBS will turn to the man who saved it before.
Now shares in Credit Suisse, one of the world's most important systemic banks, have slumped more than 9% overnight in the aftermath of the collapse of the Silicon Valley Bank. After the sudden collapse of Silicon Valley Bank shakes global markets, attention turns to the weakest link. That link is Credit Suisse. Within days, it teeters on the edge. Liquidity vanishes, confidence collapses. The Swiss National Bank injects 50 billion Swiss francs, approximately $54 billion at the time in emergency credit. But it's too late. The damage to trust is permanent. Only one institution has the size, capital, and credibility to step in. UBS. Even though UBS was doing fairly well, a collapse of Credit Suisse could still cause serious trouble for UBS. Swiss regulators were afraid of full system breakdown, so they arranged the deal in secret. In a single weekend, UBS agrees to buy Credit Suisse for just 3 billion Swiss francs, approximately $3.2 billion at the time, a fraction of its former value. It isn't a partnership. It is a takeover under duress. The Federal Reserve and regulators around the world take in action to prevent further fallout, including engineering a major deal to take over banking giant Credit Suisse. For UBS, the move is both rescue and resurrection. It eliminates its only domestic rival, expands its global footprint, and cements its dominance in wealth management and investment banking. It was a full circle moment. In the 1990s, UBS and Credit Suisse had almost emerged, but the deal collapsed. At that time, UBS was weak and Credit Suisse was strong. Now, years later, the roles have flipped. And this time, the merger went through, not as a partnership, but as a rescue.
The board of UBS knows that the newly merged firm needs a leader who can help integrate and properly deal with the Credit Suisse bad assets. And so, in the midst of chaos, UBS calls back the one man who has already walked through fire and lived to rebuild, Sergio Ermotti. Let's talk about UBS first. This is, I think, definitely the bigger of these two, right? Sergio Ermotti, who was there and really took the bank out of the financial crisis, strength down its investment bank, made a lot of changes that the street saw as positive for the company. It may sound like a cliche, but in business, having the right leader at the top can mean the life or death for a company. And the same is also true for a country. Under Sergio Ermotti's second reign, UBS is once again showing signs of strength. The chaotic integration of Credit Suisse, once feared to be a liability too big to absorb, is gradually being brought to heel. UBS is posting solid profits, cutting overlap, and stabilizing operations faster than many expected. UBS stunned investors with a $1.8 billion first quarter profit on Tuesday, saying it was sticking with share buybacks, easing concerns about Suisse plans to hike capital requirements. In 2024, the bank reports better than expected earnings, boosted by its expanded wealth management division, now by far the largest in the world. In Asia, the Middle East, and the US, the newly unified UBS is flexing its global muscle. The Bank came close to collapse many times, but in the end, UBS learned that it was better to focus on a few things it truly does best. Today, UBS is the largest wealth manager in the world, with trillions under management, presence on every continent. And that success shows that the global elites still trust a bank with their money. And right now, UBS has made itself too big to fail. But in banking, that armor can crack in an instant. All it takes is one misstep, one overlooked risk, one storm. Even the biggest bank in the world can crumble overnight.