INTERVIEW - SIX President Thomas Wellauer backs Sergio Ermotti: "The financial center needs an internationally successful UBS"

The view from Thomas Wellauer's office is one thing above all: gray. The concrete jungle of the Zurich-West industrial district stretches out before the Chairman of the Board of Directors of the SIX Group. Wellauer has a prime view of the Hardturm wasteland, where the squatter scene settled after the closure of the Koch site. For an infrastructure operator like the SIX Group, the surroundings aren't all that unsuitable: Just like the still-unbuilt football stadium on the Hardturm, the Swiss Stock Exchange is a perpetual construction site.

Mr. Wellauer, you have announced your resignation – why now?

I took office in 2020 with a clear mandate: to position SIX, together with the Board of Directors and management, strategically and operationally for the future. We have achieved this: When I took office, SIX was growing at virtually no rate. Today, we are achieving approximately four percent growth and an operating margin twice as high as five years ago. At the same time, we were able to renew the Executive Board and establish a more international focus.

Is the resignation your own decision, or was there pressure on you?

This was my own decision. For me, it's a logical moment. The Board of Directors will be completely renewed in 2026. I successfully completed two terms in office. What's more, I'll be turning 70 this year. The timing is also right for me personally.

Are you pleased that share prices on European stock exchanges are catching up with those on American stock exchanges for the first time in a long time thanks to Donald Trump's chaotic policies?

No, not really. I think it's important that the US maintains its leadership role in the world. Europe faces its own challenges: For years, it has been underinvested in defense, infrastructure, energy supply, and digitalization. Instead, European countries have expanded the welfare state.

This led investors to prefer investing in the USA.

Partly, and what's more, the EU is essentially a savings market. This is a major challenge. In my view, the citizens of the European Union must change their behavior – away from pure saving and toward investing.

That's a noble goal. How can it be achieved?

The EU's planned savings and investment union is an important step in this direction. New categories of investment products are needed to make equity savings more tax-attractive. But there is another problem: Today, each EU country has differences in the regulation of IPOs and the stock exchanges themselves. Anyone serious about capital market integration must overcome this fragmentation. This means that EU states will have to relinquish some of their sovereignty in this regard.

At the same time, you want Switzerland to maintain an independent financial market infrastructure. That's a contradiction.

Switzerland has developed differently than the EU. We already have a consolidated financial market infrastructure that has proven itself very successful. Furthermore, Switzerland regulates its stock exchange with much greater practical relevance and self-regulation – like the US, Japan, and Singapore, for example, which all rely on self-regulation. The EU is the exception here. This proximity to practice gives us speed and flexibility. This is a locational advantage that we should not give up lightly.

Is a country like Switzerland still appropriate to have its own independent stock exchange?

Yes, an independent, Swiss-controlled financial market infrastructure is of strategic importance to us. Other small countries with strong financial centers – Luxembourg, Singapore, and Canada – have also created protective mechanisms to preserve the independence of their stock exchanges. In Singapore, for example, anyone wishing to acquire more than five percent of the stock exchange must obtain approval from the financial regulator.

Stock exchanges are efficient when they handle large volumes. This is not the case with the Swiss stock exchange.

I would like to remind you: SIX operates the third-largest financial market infrastructure in Europe. And thanks to the acquisition of the Spanish stock exchange BME, we have an important foothold in the EU. This is crucial for our clients, also because we couldn't grow fast enough from Switzerland alone to handle the necessary investments.

Two years ago, you had to write off 340 million francs on the Spanish stock exchange.

The goodwill impairment in 2023 was due to an exceptional situation: interest rates were exploding at the time, and trading volumes in Europe fell to historic lows – it was an exceptional year. Importantly, the Spanish stock exchange currently generates around 30 percent of our operating profit and accounts for 17 percent of our revenue. It is our bridgehead in the EU and strategically essential.

But the integration of the two companies is still not complete.

Integration is well advanced, with one exception: the trading platforms. We tried to merge existing systems two years ago. But that's expensive and would cripple development for a year or two. In today's dynamic environment, that wouldn't be a wise solution. Therefore, we decided to wait until a technology upgrade is due anyway. If all goes as planned, we'll have a new platform within the next two years, allowing clients to trade on our exchanges in Switzerland, Spain, and the UK.

Another issue you've been struggling with for years is your stake in the French payment service provider Worldline. Its share price has suffered disastrously. Wouldn't it be better to divest?

First of all: The transaction with Worldline dates back to 2018, which was well before my time. But I also believe SIX's decision to sell its Swiss card business was the right one. Worldline's share price performance since then, however, has been extremely disappointing. You're right.

Why does SIX still stick to it?

Because Worldline is a strategic partner for us. We are closely integrated operationally, not least due to our shared history in payments. And: We are convinced that Worldline's intrinsic value is higher than its current share price. We have discussed this issue several times on the Board of Directors.

Did you intervene directly with Worldline?

Worldline has a new Chairman and CEO, and has significantly reduced the size of its Board of Directors. I believe we, as a major shareholder, played a significant role in bringing about these changes. Now it's up to the new leadership to stabilize the company, implement the announced cost-cutting program—and regain market confidence.

Unlike Worldline, SIX doesn't have to worry about a poor share price—the Swiss stock exchange itself isn't listed on the stock exchange, but is owned by 120 banks. SIX insiders call this an impossible structure.

Every model has advantages and disadvantages. Our model – "user-owned, user-governed" – has the advantage of being extremely close to the market and our customers. We sense market trends early on and can react accordingly. At the same time, shareholder diversity also brings challenges, with differing interests and, in some cases, even competitive relationships with the owners. This leads to intense, sometimes difficult discussions on the Board of Directors. But that's precisely what the Board of Directors is for: to bring together different perspectives and make sound decisions together.

So an IPO is not an option?

There are no plans for an IPO, and there are good reasons against it. Our model is challenging, but also very stable. We can fulfill our tasks well, despite, or perhaps because of, this diversity.

UBS is your main shareholder with around 35 percent, and its CEO Sergio Ermotti publicly criticized SIX in 2017. What is your relationship with the bank?

At that time, the idea was to establish a Swiss transaction bank out of SIX. This initiative could not be realized – I understand the frustration at the time. But that was eight years ago. UBS is our largest shareholder and also our largest client. We work closely together at various levels: operationally, strategically, and also on the Board of Directors. I can say with conviction: Our collaboration is working very well.

And UBS is satisfied with SIX’s strategic direction?

You'll have to ask UBS. But I haven't received any signals to the contrary. What's important to me is that UBS plays a key role for us as a financial market infrastructure operator – it accounts for around a third of the volume that flows through our platforms. Without it, we wouldn't be able to operate our systems cost-efficiently, let alone develop them further. A strong, internationally successful UBS is therefore in the best interests of the Swiss financial center.

How do you assess the state of the Swiss financial center after the demise of Credit Suisse and its takeover by UBS?

We shouldn't kid ourselves: The collapse of Credit Suisse was a tragedy. And it also led to reputational damage for the financial center. But I often notice abroad that this damage is not as severe as we sometimes think here, probably thanks in part to the determined rescue operation. Overall, I consider the Swiss financial center to be robust. Of course, it is under pressure in international competition. But its importance is enormous – for the real economy, for corporate financing, and for the attractiveness of the location. In this context, a powerful major bank is indispensable. The financial center needs an internationally successful UBS. Without it, it would no longer be what it is today.

Following UBS's emergency takeover of Credit Suisse, politicians are discussing higher capital requirements. What is your position on this?

I understand the discussion. And much of what's being discussed now is plausible. But in the debate about more equity, one thing must not be forgotten: UBS already needs to build up approximately 20 billion Swiss francs in equity capital as part of the takeover – regardless of anything else that is decided. 20 billion Swiss francs is no small sum. Regulation is important, but it must not lead to our only global bank becoming internationally uncompetitive.

Those in favor of strict capital requirements respond: UBS management may be cautious today – but what about in 15 years?

No one can predict the future. But that doesn't mean we always have to assume the worst. It's also important to recognize that in the case of CS, the existing capital rules were apparently not even applied; instead, exceptions were granted. Again: We need a strong, globally active bank, and we need regulation that is effective but doesn't prevent banks from being internationally successful. We must maintain this balance.