Welcome, thank you for joining us. Welcome to our 28th Annual Financial CEO Conference. 28, so it's, it's a resonant number. You wouldn't have thought it was a resonant number. Is that how long I've been, I've been doing this? Not, not all the time. This is my 11th year here. It's, it's 28 years ago, Sergio was with Merrill in the first of these conferences, back in a, back in a former life. 28% is the, is bank share price performance in the 12 months since we were here last. I had to check that last night because it doesn't feel like it was a really good 28%. It feels like somehow it's been emotional and quite stressful. But, you know, bank shares have been, generally pretty good. Most banks that you'll meet in the next three days will be the same bank that they were a year ago, with a lot more profits. As interest rates have moved, bad debts didn't happen, energy prices have stabilized. Banks have just made a lot more money. So we've seen not 28%, but about 35% earnings upgrades at the banks over the past 12 months. So hopefully the banks will generally have a robust story to tell you. The rating of the industry is now close to a 50, not a 28-year low. Close to a 50-year low. But I'm delighted to be starting today with a bank that is very different one to last year, and I think this time last year, Sergio may not have been expecting to present as he was enjoying a well-earned partial retirement as well as being chairman of another major Swiss financial institution. So I'm going to invite Sergio up onto the stage, and we're going to start this week's conference. So is it... I hope it's a pleasure for you to be back. It's an absolute pleasure to be welcoming you back, and such extraordinary circumstances. I think good timing because your second quarter results three weeks ago really seemed to shift the market's perception from whether UBS had almost wanted to do the deal with Credit Suisse, whether it was a thing that had come up outside of your control, but whether it was something that the company wanted to do. I think the market's been able to see that it was something you're very pleased to be able to do. On the back of that, just a little, please, on your short-term and medium-term priorities now that you've sort of established the base of, you know, the scale of the opportunity here. Oh, thank you, Alastair. It's, well, it's great to be back, totally unexpected, but, of course, it's a great opportunity, great challenge and for the bank, for Switzerland, for myself. I guess... Yeah, I think that this is a transaction that, you know, you mentioned, UBS probably didn't want to do it or... Well, you know, of course, it's a complex transaction, but a transaction that now is there, we believe is gonna create a great value, not only to shareholders, but also I'm totally convinced to employees, to clients, and broadly to the society. Now, in terms of where we stand, of course, the first top priority for us was to stabilize a Credit Suisse franchise, both in terms of clients, and winning back clients, has been an important focus from day one. Particularly after closing, we put a lot of effort in doing that. I'm very pleased with the outcome. The integration is going very fast. It's only three months. We truly closed the transaction on June 12th, but we already took several actions, both at from a target operating model standpoint of view. We defined the organization's three levels, four levels of, actually four levels of responsibilities within the bank. We returned the guarantee. Was very important. We returned all those emergency facilities that were granted. We announced the integration of the Swiss operation, and now we are in full speed executing on this year's synergies, but also preparing for the three-year plan, the 2024-2026 plan, that we will announce in February with our full-year results. And last but not least, we of course also manage for growth. Our ambitions in the U.S. and APAC are only reinforced through a critical mass. We are now managing between the private and the institutional parts $5.5 trillion, and this is a great platform that gives us economies of scales and allows us to grow for the future. So very, very pleased with the outcome. A lot of work to be done still, but, the momentum is pretty positive. Thank you. And then just on the stabilization, and I guess that was one of the things in Q2 that stood out, that I'd pictured that there must have been quite a great deal of uncertainty about whether the assets and the deposits and the funding that Credit Suisse had on the day, you were still gonna get further outflows, and actually that turned round. From the outside, it turned around pretty quickly. Did you know that that was going to be smooth, or has that been a pleasant surprise? No, it's a pleasant surprise, to be honest. I think that, actually, you saw we also saw in April and May, still outflows, I mean, it was still the long tail of post the announcements, partially people that already decided to take out the money, yet still some uncertainty around the transaction, because until the transaction was closed, some people were not really sure about the outcome. As soon as we, I would say the turning point was probably the handing back of the guarantee, and then, and then, but from a momentum standpoint of view, but already in June, before announcing the closing of the transaction, we started to see a, you know, positive inflows. Yeah, probably one or two quarters earlier than I expected. But, in my point of view, it's really down to the testament of the strengths of the franchise, and that we have the credibility we gained. And, you know, and also, last but not least, very hard work by all the people on both sides, you know, particularly from our new colleagues from CS, from Credit Suisse. They went through very tough times, and I'm quite impressed with the energy level they put despite all this, in going out and regaining share of wallet and clients. Thank you. The integration then, the principle's done, the legal mergers, the acquisition done. I mean, how does one... Perhaps Swiss Bank and Wealth Management. Starting with the Swiss Bank, how does one actually do that? You know, how long does that take? What milestones should we be looking for to judge the progress you're making in putting those two comparable businesses together? UBS was obviously much bigger at the end, but a couple of years ago they were quite comparably scaled. Well, I guess... Look, we are not doing anything special that hasn't been done in the past. The big difference, I went through myself in the past in M&A, but usually you have at least two months to prepare before the announcement. Then you have de facto nine months before you get all the regulatory approvals. So in that period of time, you are managing, you are preparing for the target operating model, the fine-tuning, and everything that goes on. In this case, we have been doing that in a fast track, right? So basically, in three months, we did the preparation work that led to the also the closing, and then in the following three months, as we speak, we are now already in execution. The complexity was that Credit Suisse was structurally losing money. Usually, you go through M&A and you have, you know, you look for synergies, and you look for- you accept top-line negative synergies, and, and you manage somehow, for the best outcome. Here, we had to immediately step in, to, you know, reduce cost, stop the outflows, and was an a mix between a, you know, a traditional M&A and, and an emergency, situation. So we have an integration office that takes in consideration, you know, all the major items that are group-wide relevant, but then we let each business division and, and group function go through their integration. The target operating model is U- is UBS. The IT that we choose is UBS. So we try to facilitate as much as we can, the integration. It doesn't mean that necessarily all the time, the UBS technology and target operating model is the right one, but it's the one that we can execute faster. Of course, as we go through that, we look at areas where we can pick up best practice. For example, there are 3,000 IT applications at Credit Suisse. We're gonna keep 300. So because we believe they are essential to make our business stronger and, or maybe better than the one we had. But for the rest, we need to go very fast on one system. That's the name of the game here, is to not to try to go for perfection, but rather a good balance between efficiency and effectiveness in the process. Thank you. No, clear. So in wealth management then, I mean, I joined UBS kind of in the aftermath of the Swiss Bank merger. So, you know, we've switched. I was at UBS, Sergio was at Merrill. And, you know, that was actually a very successful deal in the end, but particularly in wealth management, there was a lot of clashes. For quite a long time, there was factions, the old UBS guys, the old Swiss Bank guys. And, how do you... You know, so the question is, how do you avoid sort of lingering complexities now, I guess, and is that the most important thing, or is it, again, bringing confidence back to clients to stabilize the assets and the liabilities there? Well, look, it's... That's definitely not an easy task, but having said that, you know, we try to be, you know, as sensitive as possible in making sure that... Yeah, the new colleagues are integrated in the way we operate, and we do the best out of it. You mentioned back then, I remember, it was 1998 or so, right? But I'm going back to what I said before. You're talking about two banks, Union Bank of Switzerland and Swiss Bank Corporation, that were de facto going concern. Mm-hmm. Profitable banks. Yeah. The emotions when you bring together two business that are somehow still operating well, it's much higher, I would say. Here there is a lot of frustration, we you know on, on. Of course. But on the other hand, it's crystal clear that Credit Suisse in there was not a viable business any longer. So in a sense, what we try to do is to get our new colleagues to fully understand, and the clients, that now there is a chance to flourish again in within UBS and make UBS stronger. It's all about them understanding that this is now the best option possible for their future, for their clients, and so in a sense, it's a different issue. Yeah. Clear. Thank you. And I guess, as a result of the way that things worked out at Credit Suisse, there's a big Non-core and Legacy book now. Now, these are funny, we're this room is sort of connoisseurs of Non-core and Legacy because, you know, every banks have one. Certain banks who are presenting later in the week have had three or four over the last 15 years, and they've often been long dated and very expensive to run off. So can you tell us about the process there, capital costs? You gave us some disclosure at Q2 about the natural run off of the business, but how you're approaching Non-core and Legacy, how people should think about the drag of that or otherwise? Well, that's an important element, but for me, while taking down the Non-core assets, it's a priority. You really need to go back into our presentation, and maybe some of the people in the room may remember that we put as a priority in Non-core and Legacy, cost reduction, and then run down of the risk-weighted assets. The reason being that the biggest value creation for us is to shut down the IB infrastructure and the Non-core infrastructure as fast as we can. This is half of the savings that we are forecasting between now and 2026 will come from that. When you look at the natural decay profile of the Non-core, half of it will be out by 2026. Of course, we're gonna focus and try to do better, and we will do better than that. But the value creation from a shareholder standpoint of view, it's by taking decommissioning the IT and the infrastructure that supports all those assets. Now, we have a big advantage because most importantly, we are not concerned about taking losses, if necessary, from a revenue standpoint of view, if the positions are not economically sustainable or we don't believe they are fitting any longer in our strategy or risk appetite, because we have the cash generation of every other businesses that allow us to do that. So, of course, the most important issue is also to understand that synchronizing the runoff, proactive runoff of Non-core with decommission is also very important because there is a marginal benefits in keeping some of those positions. Not all positions, actually, the vast majority of the positions are good positions. There is no credit or toxic kind of profile around them. So we need to really measure what is the best economic outcome for shareholders, because if we go too fast without being able to decommission, we may destroy value. So it's a fine-tuning exercise, but I really emphasize that the most important topic to... Around Non-core, which is not, you know, what everybody wants to talk about- Mm-hmm. That is cost, is not the risk-weighted assets. Thank you. Now just a point about it. So I've got a ton of questions here. There will be the opportunity for you to put your hand up and ask. We're not going to run down the clock. We're gonna ask every company to leave a bit of time, for you to throw what you want. I mean, obviously, my aspiration is I've asked all your questions before then, but do feel free, in 10 minutes or so to put your hands up if you've anything pressing. I'm gonna move on, back to the cost, Sergio, that this ambition to take out more than $10 billion sounds like an extraordinary number. I guess you've given us half of that. You know, how hard is it to take that much out of a business the size of UBS? Well, it's hard because, you know, at the end of the day, no matter what, in our industry, it's around people, so that element is pretty hard. But it's necessary because, you know, as I mentioned before, CS was structurally losing money, and then we need to extract the synergy. So the exercise here is all about restructuring first, and then synergies. But of course, you know, if you look at the starting point, our view is if you take end of 2022 cost base combined, and you look at this combination as a domestic merger, although it's much more than a domestic merger, but it's true that we operate in the same locations worldwide. So we need to start from there and say: What can you expect there in terms of synergies out of such an issue? And then we do that on a gross basis, and then we look at how much money we looked at how much money is necessary to make our infrastructure more resilient. We added back what we expect between now and 2026, inflation and growth that we aspire, as I mentioned before, growth, you know, we are still looking to invest in our business. So to try to come with a, you know, net number, which drives our ambitions, that to be below 70% cost-to-income ratio, by 2026, excluding the pull-to-par and the cost -to -achieve effects of the integration. So, that's the way we look at it. So we look at gross, and then we need to add back cost. Mm-hmm. And then we need to add back cost for inflation and growth. And IT, I mentioned the IB, the IB and Non-core infrastructure. The synergies that we do expect from wealth management, you know, onboarding all the Credit Suisse clients into the wealth management platform of UBS. We announced the Swiss integration, real estate footprint, corporate center synergies, you name it. So there is a lot of things that have to be done. Credit Suisse has 1,000 legal entity. We have around, UBS had around 300. So there is a lot of scope for reducing costs, but most importantly, to optimize capital consumption and liquidity, trapped into, into different legal entities. Thank you a lot. I'm pleased you mentioned that. I've got your fixed income presentation, legal structures and all, all, some, some great numbers here. Let, let's just touch a little on, on, on capital, if we could. I've got investor relations looking terrified here, but it- the... One of the things that I've found the markets wanted to talk most about is the Common Equity Tier 1 ratio that, that your bank will have to have, and part of that is the matters of the Swiss Too Big to Fail regime as it exists, and part of that has been a sort of general concern that regulators tend to ask for more capital, but you've, you've been quite clear that you think 14%'s a good number for the bank. Could you talk about the moving parts of that sort of this year and over the next couple of years? What gives you the confidence? 14% is a pretty high number, but the market seems to keep coming back to, "Oh, what if it's more?" You know, and what gives you the comfort that 14% is the right level for the bank? Well, I can only comment on what I know, right? But first of all, let's go through exactly why we set the 14%, and why I believe it's the right number for us to operate in the foreseeable future. It is clear that, as we go through the restructuring, and we are out really winning back clients, it's absolutely critical that our capital position is strong and undisputed, right? So... And in that sense, particularly when we look at the mismatch that we have between pull-to-par positive effects and cost-to-achieve, will create volatility on CET1. We can't, we don't want to have our CET1 falling below a certain level, and potentially even creating, you know—you never know which environment you, you— Yeah, yeah. It will have, right? So it's very important because our the strengths of our balance sheet is a critical pillar of our strategy, and has to be when you are the leading wealth management franchise around the world. You can't afford to have discussions around your capital. So just to give you an example, in the rest of the year, we're gonna have positive pull-to-par effects of around $1.5 billion, and we expect cost-to-achieve impact of around $3 billion. So you see that already that one creates volatility, you know, right? Yeah. So, the second element is the 14%, in my view, is likely to be around that number, is likely to be a good landing zone. Why? Today, we have a minimum capital requirements of 10.6%. The Swiss Finish that will be applicable to us from 2026, 2027 onwards. So not before then, 2026, 2027 onwards, we'll add around 200 basis points, because of market share and balance sheet size. So that will make us landing at minimum capital requirement of 12.5%, and I believe that, you know, our business should run between 1 and 1.5 points of buffer between minimum requirements and, I mean, like many of our more, you know, peers, you know, 1 to 1.5 points of buffer is, is the right way to, to land. So for different reasons, 14% in my point of view, is that. By the way, Basel III as being almost implemented in Switzerland, of course, we see that, for many, for many other banks, maybe it's not yet the case, particularly in the U.S. I, I saw numbers of, going around, around 20%, inflation. For us, I don't believe this number will be as, as high as that. Actually, we expect these numbers to be closer to 5% in aggregate. So, Basel III is also not a huge headwind in that sense. Yeah, that was, Jamie Dimon said it was 30%. So the Fed says it's 20%- Yeah. -Jamie says it's 30, but- But I It's U.S., then, yeah. As you know, Alastair, I mean, we have been saying that in the past, and people were skeptical. But Switzerland has been implementing Basel III very coherently, very fast, compared to many other jurisdictions. You still see everybody reporting under Basel III, but I'm not so sure... I mean, actually, now we are sure- Mm-hmm. That it was not always the same Basel III. Sure. Right? So now, we are now getting to the end of the game. Fine, you know, I think that we are well prepared for that. Thank you. And then, you've also ended up with a, with a great deal of, gone-concern capital as a bank, which is a, a kind of a function that Credit Suisse at the end, was much smaller than it expected to be. Is there, is there any opportunity for you over the next couple of years to, to create efficiency in that part of the capital stack? It's quite a big cost as a Swiss bank because there's such big numbers outstanding. Yeah, it's a big cost, and actually, you know, the answer is that if any, it's marginal. Because, of course, when you look at group level, the stack is very big. The truth of the matter, you need to go down below the group, in the subsidiaries and look at the capital requirements there, translating to these additional buffers coming on the top. I don't think that there is a lot of scope to reduce that. We need... It's a cost. By the way, yesterday we had a very successful, you know, transactions in the market. We attracted, you know, we raised around $6 billion-$7 billion of capital, of new funding, if I remember correctly, $6 billion-$7 billion. Actually, sorry, $4.5 billion, and we demand for $16 billion. Yeah, the cost is there, which shows that there is definitely a premium, right? So for this TLAC instruments that are there to absorb capital, which I think is the right structure. You know, the answer is that I don't believe there is a lot of scope to reduce that. There is a scope for us to deploy our capital and our resources more effectively, but not to reduce those buffers. Thank you. So that's the platform established of 14 is a good number. I think hopefully that's been broadly closed down. So the other number you gave us is 15, which is a return on Common Equity Tier 1 as a run rate by the end of 2026. So I guess, yeah, putting on, how confident are you in that? And then what's the shape, broad terms of getting there? Because it's the most unusual deal, because you've got this pull-to-par, which not by quarter, but overall, you've said should pretty much offset the impact of the Non-core run down. Yeah. The pull-to-par should broadly cover- Restructuring costs. for the restructuring charges. Yes. Yes, yes. 15%, 2026, easy? Oh. Two days a week off. Very easy. And then what's the, what's the shape of that? Do you, do you move to that number, or is that very much- Not lucky. That's exactly what you're gonna hear in February. So now, we think that we have enough confidence and with today's starting point, or let's say, June second quarter data, to drive what we believe is the exit rate in 2026. What we are now working on is exactly how to connect the dots between now and then, because of this volatility we will have or mismatch between in executing that. But this is gonna be part of what we present in February, so. It's worth a try. Come on. Yeah. And then, in your previous years running UBS, growth was a big part of what you delivered in the wealth management business. I suppose the question is, how quickly can you move on from integrating Credit Suisse to growing the business again? Is it not quite that simple, because winning back assets that were lost is fantastic growth in some ways? And then, what are the investments you need to make? You mentioned briefly the U.S. and Asia. What are the investments you still need to make to round out the franchise? I mean, you've made a big step forward, but there's always work to do. While, you know, winning back, you know, for us, winning back is not part of growth. Winning back is winning back, and is resetting our starting moment. I think that's... And then from there onwards, of course, we're gonna look at our combined growth aspirations. Look, you know, Asia, particularly in Asia, I think that we do expect definitely a less linear growth path, a much more volatility and sentiment swings that we know, compared to what we saw in the last decade. It's quite clear. You know, the economic conditions, the geopolitical conditions are creating much more uncertainty, and that's reflected in clients' sentiment. So, but we still believe there is a lot of growth opportunities, not only in China, but in the entire Asian perimeter. The combination of the two franchises are giving us an extra boost there. In the U.S., I think it's very important to look at the integration of the investment bank in the U.S., and how those capabilities will allow us to give our client advisor, financial advisor in the U.S., even more access to opportunities to help clients to monetize or to go through M&A transactions for their own businesses. It's very important. So, we now have finally a critical mass in the U.S. in terms of bankers. And also we look at ways to diversify the revenue streams in our wealth management business in the U.S. Right now, of course, we are going through a little bit of a tougher time there. The NII is under pressure. Of course, markets is high, but the clients' activity is not the one that we saw in the past, right? Mm-hmm. So, therefore, we need to really keep investing for diversification there and making our revenue streams more diversified. Thank you. I know we'd all, we'd all like you to trade more as well. Nobody's laughing. There will be the roving microphones. We have five minutes for questions. The lights are in my face, but I will be able to see- One in the front. First question. Yeah, thank you. My question is simply, on a new AT1, the whole of Europe has equity conversion or something similar. It may be worth considering that your cost level may go down for a new AT1 if you revise and have equity conversion. A question. Or a statement. Oh, a statement, yeah. Well, we are assessing all the options around the AT1. AT1 is an important part of our capital stack, and I mean, of course, we will do what makes sense for us, but also what makes sense for investors. You know, we are examining the situation. We are not under pressure at this stage. We have been around with fixed income investors, as Alastair mentioned before. Our priority was more on the OpCo and holding company funding, and we are assessing the optionalities on AT1. Morning. Thank you. The base case guidance for the size of the cumulative CTA is a very large number, but I think I hear you discuss that a lot of the headcount reduction is going to be through natural attrition, so it takes time, but it's cheaper. So my question is: could you give us some idea of what you're going to spend the CTA on, if it's not restructuring costs to exit headcount? And is there some possibility that actually the total CTA might, might be meaningfully less than the base case that you've set out? It's too early to go through that analysis. I think that we will need to assess exactly the exit situation in 2023 of headcounts, based on the natural attrition. Our look through, we already have a good view on retirements, right? We are putting some, I would say, reasonable assumptions on, reasonable in terms of, not too aggressive assumptions on attrition, for the next couple of years. We may have also to use, in some cases, early retirements, and then we know that we have a part of it is gonna be more proactive. It's also very important that we are going through an exercise in reshuffling our. In technology, for example, our permanent headcount to contractors ratio. I think it's. It is around probably 55%-60% right now, permanent to external. And we will definitely use this opportunity to increase the ratio much higher, so and reduce our dependency on the contractors, which of course are costing more, and our turnover is much higher. So it's a little bit early to make that assessment. As I said before, we are working on all these details. Some of them will be things that we can communicate or want to communicate, and others are not gonna be, for obvious reasons, we will not want to communicate. Thank you. Christian at the back? Yeah, thanks. So look, in a spreadsheet, it's really easy to model this out, right? I can put synergies through, I can put cost -to -achieve, I can, you know, pull to par, and it all looks wonderful, right? But in reality, you're merging two different cultures, different people. Your, your key assets get off the elevator every day. So can you talk a little bit. My understanding is that you've put some retention bonuses in place for the top 20% of private bankers at both UBS and Credit Suisse. Can you talk a little bit about what you're doing to address some of those cultural issues and some of the change management at a point in time that's pretty critical? Yeah, that's very important. I mean, the retention was there in some areas to, you know, not only on client advisor. I think that one cannot underestimate the amount of people that are still necessary to run two parent companies. So, I mean, we have to really make sure that going from finance to risk management, to compliance, we need to keep a critical mass of people around as we go through the merger. So, in that sense, you know, we had to give, you know, comfort to some people that, you know, they would have a job for the foreseeable future. For example, you know, the retention was not only retention so-called awards but also in some cases, the retention was making a statement that for a year, for 18 months, you have a job, don't worry. So that's probably even more important than in some cases giving a bonus retention. Look, you know, the culture, the most important element in pulling together the two banks is really to look at what Credit Suisse is doing better than we did at UBS and vice versa. And last week, I had a... Or two weeks ago now, actually, a meeting with the top 250 people in the new group. A third of them were Credit Suisse people. It's very important that when you look through in the organization, in the first two or three layers, we have between 20% and up to a third of Credit Suisse people. So it's a very important element, because we do our best, at the very least, to go through a meritocracy process in giving, you know, the new roles in the combined organization. Despite the fact that we, as I mentioned before, we are running the integration as a UBS-led integration. The very important cultural elements that we need to bring to convey to our new colleagues, in my point of view, is not around the behavioral element. I think the Credit Suisse people are good people, and, you know, I don't have, you know, if you take out some exceptions that are, you know, unfortunately common in our society, I would say not only in our industry. The real element is the cultural elements on how to deploy resources, how to use balance sheet, how to price the balance sheet, and making more people aware what it means to have a balanced relationship with our clients in terms of, you know, being fast in making commitments and giving resources like lending, but at the same time expecting a sustainable return, if not on that transaction, in the overall relationship. Because I do think that at the end of the day, the best, one of the biggest opportunities we have in getting to the 15% you mentioned- Mm-hmm. It's not just the cost, winning back clients, but also to manage more efficiently the $ 240 billion of risk-weighted assets that we got, right? And that's a cultural issue that more people in the organization must be aware of the economic contribution they do below the bottom line. I mean, in terms of capital deployed versus expected returns. Perfect. Sergio is six seconds over. Thank you very much. Sergio Ermotti, thank you for this- Thank you. this morning. Thank you.