UBS Chairman Weber Says Coronavirus Effects Are Underestimated

UBS Group AG Chairman Axel Weber said markets are underpricing the risk that the coronavirus poses to the global economy.

“There is going to be quite a bit of impact that is going to go beyond the first quarter and that is where fiscal response, providing businesses with some tax relievers, some emergency funding, that is going to be very important for putting businesses through,” Weber said in a Bloomberg TV interview during the G-20 Summit in Riyadh.

By his estimates, global growth will experience a massive drop from 3.5% to 0.5% and China will post a negative growth rate in the first quarter. That’s not happened since at least 1990, according to data compiled by Bloomberg.

Still, Weber said that the Chinese and other central banks in Asia have room to maneuver that goes beyond just adjusting interest rates. “They run a pretty tight system of controls on investment quotas and they could liberalize that temporarily and try to get investments going,” Weber said.

He added that the room to maneuver comes with the caveat of being innovative with measures and being able to take on a higher risk in expansionary monetary policy.

Bank Succession

UBS moved forward the announcement of its successor to current Chief Executive Officer Sergio Ermotti due to a timing conflict, Weber said in the interview.

The Swiss lender named ING Groep NV’s Ralph Hamers as its next CEO this week, but that coincided with a planned issuance of an AT1 bond by the Dutch bank. That bond was subsequently pulled and the bank urged UBS to make an announcement sooner, Weber said.

Hamers will start on Nov. 1 after a transition period of two months alongside Ermotti. Hamers leaves ING at the end of June.

The choice of an outsider with a record of pushing digital banking came as a surprise to analysts, investors and even insiders because of Hamers’s limited experience in wealth management and investment banking, UBS’s core businesses.

Weber admitted the bank passed up on making history by not choosing Chief Operating Officer Sabine Keller-Busse, who would have been one of the first female CEOs of a major global bank after Alison Rose’s appointment to run RBS Group Plc.

“The issue was we are going through massive changes at the bank,” Weber said. Hamers is “somebody that in the area of moving more of wealth management onto platforms has some experience and Sabine will support him in that.”

Weber added that Keller-Busse is “one of the best female executives we have on the European side in banking, if not globally, and she will build her career. She will be in the future one of the people that you hear more about,” he said.

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