Sergio Ermotti, CEO of UBS gestures throughout a panel dialogue on the Swiss-American Chamber of Commerce in Zurich, Switzerland January 18, 2019.
Arnd WIegmann | Reuters
UBS Group CEO Sergio Ermotti says the “unimaginable” market demand for the financial institution’s current issuance of AT1 (extra tier one) bonds is a “sign to the Swiss banking system.”
The Swiss lender final week started promoting the bonds — which have been on the coronary heart of controversy throughout its emergency rescue of Credit score Suisse earlier this yr — for the primary time for the reason that takeover.
Ermotti instructed CNBC on Wednesday that he was “greater than inspired” by the huge oversubscription obtained for final week’s return to the market.
“The AT1 demand was unimaginable — $36 billion of demand for what occurred to be $3.5 billion of placements — and in my viewpoint, it was in all probability the spotlight in a way of the arrogance is restoring not just for UBS, I’d say additionally it’s a sign to the Swiss monetary system,” Ermotti mentioned.
The wipeout of $17 billion of Credit score Suisse AT1 bonds in March, which was a part of the rescue deal brokered by Swiss authorities, prompted uproar amongst bondholders and continues to saddle the Swiss government and regulator with legal challenges. Some commentators advised that it had undermined confidence within the historically secure and dependable Swiss banking system.
“The primary reactions have been based mostly on feelings or those that have been very loud as a result of that they had their very own curiosity, however I believe that, as time glided by, individuals had sufficient possibilities to actually take a look at the idiosyncratic scenario, and in addition in all probability look extra rigorously into the prospectus of what’s written,” Ermotti instructed CNBC’s Joumanna Bercetche on the sidelines of the UBS Convention in London.
“These bonds have been designed to be there for these sort of conditions so I believe that folks over time, or the overwhelming majority of the individuals, are coming all the way down to a extra balanced manner of issues,” he added.
