Good morning. Well, judging by those results from the room, you ought to be a pretty happy bunch. Fortunately for me, I don't have to tweak my quick remarks. So listen, good morning everybody, and welcome again to the conference. It's really great to be here, and we have a terrific program of events. Over the next few days, we will hear perspectives from over 100 companies, and I think that really reflects the depth and breadth of the financial sector across Europe. But before we commence and open the conference, I do want to thank Alvaro and the rest of the Morgan Stanley team for putting together this flagship event. When they design this conference, their starting point is always the data and the insights from our best-in-class global research, and that helps us to get to the key issues and the important issues for the sector.
Thank you also, I think I've seen her somewhere, Juliette Estridge, our Head of Research in EMEA, for leading the fantastic team of researchers and economists we have in the region. So this year, the economic data is definitely showing signs of improvement. Central bankers have made progress in slowing down inflation, and we expect rate cuts by the summer, as do you. Investor sentiment and corporate confidence are also on the rise, and we do see high levels of engagement, as evidenced by a number of deal announcements that you all have seen over recent weeks. So look, these are really encouraging signs of a constructive environment, but I think we have to remain cautious optimists, and we've got to stay attentive to the data that could potentially change the outlook for the sector.
So the theme for the conference this year is resilience and yield, and that informs our extremely positive view of the bank sector. As a global firm, Morgan Stanley is extremely familiar with the theme of resilience. Our strategic transformation has given us great stability and made us more nimble, and it's through our integrated firm we run world-class businesses in wealth, asset management, and investment banking. But I'm not going to steal his thunder; you're going to hear a lot more from this when Alvaro does a fireside chat with him tomorrow morning, and that's Dan Simkowitz. He's our Co-President and head of Institutional Securities , so I would say that is a panel discussion and a fireside chat not to miss. We also look forward to hearing from many other CEOs and C-suite executives on their company priorities for 2024 and beyond.
Nikhil Rathi, CEO of FCA, and Claudia Buch, Chair of the ECB Supervisory Board, will also be joining us to give us the regulators' perspective. And I'll call out a couple of other panels not to miss this week, there's the Asset Management Panel on Strategies to Deliver Growth and the Private Markets Panel weighing structural growth versus cyclical trends. Other key themes that we will explore: AI, which as we know will have a transformative effect on the operational leverage and efficiency of this industry. And to dive deeper into this topic, we've got Ben Huneke over, he's Morgan Stanley's co-head of Investment Management, and he'll participate in a panel discussion with Oliver Wyman. Sustainability: it's still top of mind for investors, and we know that the industry plays a vital role in helping companies through energy transition.
Finally, I'm extremely proud to say that over 50% of the sessions this year are presented and moderated by women. Look, thank you very much for joining us. You make this conference the premier event for the industry, and I'm going to open the conference and invite our first speaker, Sergio Ermotti, CEO of UBS, and Giulia Miotto from Morgan Stanley Research. Thank you and welcome.
Good morning everyone. I'm pleased to be joined today by Sergio Ermotti, CEO of UBS. Good morning, Sergio. Thank you for being with us. I have a few questions I'm sure the audience will have as well, but before we go into that, I'm going to ask the audience a polling question. Perfect. So what do you think will drive UBS' share price performance over the next 12 months? There are five options, so the first: smooth legal merger execution and buyback launch. Number two: GWM performance on the new money and revenue growth. Number three: cost delivery. Number four: the non-core deleveraging. And then the number five is clarity on capital requirements. 10 seconds to vote. Number one is the result, so smooth legal merger execution and subsequent buyback launch. Right. We will get back to that, but let me start with a question on objectives for 2024.
So 2023 has been a transformational year, and 2024 will see a continuation of this restructuring trend. So what milestone are you most looking forward to this year?
Well, actually, 2023 was about, most importantly, stabilising both the client franchise at Credit Suisse, stabilising the people, repaying the guarantees to the Swiss government, the emergency liquidity, and initiating the cost, and planning for 2024, 2026, which is the most important time frame in our integration. And as we do that, we are also starting to look at how to prepare for the next phase, which is growth beyond 2027. So I would say that, of course, 2024 is pivotal, as I mentioned a few times already. And in that sense, if I look at the survey, I would have voted for number 6, all the above. So it's quite difficult to really create the momentum and what we need to do without ticking all those boxes. Of course, short term, we are very focused on delivering on the legal entity mergers on the parent company.
We are filing with 70 regulators, 50 countries. So that should finish towards the end by the end of the second quarter, I would say. And then so in the third quarter, we're going to merge the Swiss entities. And this is quite important because it's the conditional sine qua non to be able to then go to the next level of extracting cost synergies in the second half of the year so that we can exit 2024 with more than half of the CHF 13 billion that we need to save gross already executed.
Perfect. Thank you. So if we can talk now about Global Wealth Management, a key division. So progress on your asset growth is one of the key metrics that the market follows, of course. So how are you planning to achieve your ambition of CHF 5 trillion in client assets?
Well, as you saw from our guidance for the next three years, it's by somehow the fact, although accruing under CHF 1 billion is not really doing a step back, but the fact of recognizing that the next two years is more about quality of growth than quantity of growth. Of course, 2023 was about stabilizing the client franchise. We wanted to get back as many clients as possible. We still do that. But if I look at 2024, 2025, the team is very focused on addressing one major milestone of the 2024, 2026 transformation because it's about restructuring and integrating CS into UBS, but it's also about optimizing the balance sheet. And we can't grow sustainably without accepting a more modest growth in the next couple of years. The reason is very simple because, first of all, structurally, we showed it in our four-quarter presentation.
Structurally, many assets are yielding just too little compared to our ambitions in terms of revenues and risk-weighted assets. So we need to go deeper and understand why. Actually, we know why. Too many clients' relationships are mono-products and not necessarily priced in the right way. So we need to either get those clients to do more business with us and justify that kind of loss-leader position, or we need to then address and accept that maybe some assets will go somewhere else. So for me, it's all about quality because if we want to really sustainably grow the business in 2026 onwards, we need to accept that there has to be an alignment of philosophy on how we run businesses. For us, it's very clear, particularly in wealth management, lending is a tool to do business with clients. It's not the tool. That has to be addressed.
Very clear. Thank you. If we can talk about client sentiment and activity, so how are your clients so far navigating the environment in Q1? Can you tell us a bit more about activity levels and sentiment?
Well, as you know, I don't really like to comment on current quarters. So I think that's and I will just tell you that I haven't seen. I mean, of course, Q4 last year was definitely affected by not only seasonality factors, some external factors. I would say the first quarter is getting us the benefits of the seasonality. Let me limit my comments by saying that, of course, when I look at some other comments in the industry, I wouldn't say that we are far off from those comments. When I look at the fourth quarter, we had very strong banking results, for example, and therefore, I do anticipate that we will have an improvement on a year-on-year basis, but sequentially, it will be not easy to achieve that.
But I'm very pleased with the way most importantly for us is the traction and the engagement with clients, no matter if I talk about the investment bank, in wealth management, we are able to get tractions, and the momentum is positive. So I stop here my comments on Q1.
Thank you. So let's go back to more strategic questions then. Integration: the task of merging two G-SIBs can be seen as daunting. So what are you most focused on, or what keeps you up at night when we think about this task?
Well, actually, the most important topic for us is not to distract the entire organization around the integration. So if you think about it, we have less than 10% of the bank working on integration, and the vast majority, at least half, is working in technology. So we try really to make sure that people don't get distracted or, most importantly, don't use the integration as an excuse to get distracted because you can easily see how the first sights of any external issues people could hide behind the topic of, "Well, the integration is distracting." Actually, we want to make sure people can stay focused in serving clients and helping them navigate the challenging environment. It's still very challenging.
As I said before, looking at the quality of our relationships, making sure that we show them the best products that are now part of a combined offering that we have with Credit Suisse. So the most important issue is not to get distracted by that. The rest is pretty straightforward. It's about execution. We have a well-defined timetable. I mentioned before the one about the parent bank merger. We have around 6,000 tasks that we need to execute in order to get to the final integration in 2026. So it's very mechanical, and it's very focused on that.
Perfect. And so if we stay on this topic and we talk about costs: CHF 13 billion of gross cost savings. It's obvious in the non-core unit we get that. But aside from the non-core unit, where do these cost savings come from?
Well, half is coming from non-core, CHF 6 billion plus. So non-core is going to be by the end of 2026. It will be below CHF 1 billion. So I think that we are basically 85% down. So I think that we are making very good progress, and I'm very pleased with that. The rest is coming from the integration of the wealth management platform, the Swiss business, the IB, and across the board because, as you appreciate, I'm sure, still we are still running two G-SIBs at this stage. So if you look at everything that goes together from risk management to compliance to treasury to the finance department and so on and so forth, it's still a fully fledged, two fully fledged global banks.
So as we bring together the two businesses over the next 2 or 3 years, we can then unlock the synergies, particularly on the support part of the equation.
Perfect. And so a hot topic these days, if it can change a little bit, is commercial real estate, both in the U.S. and in Europe. So can you just remind us what is your exposure, and is there any area which you're watching more closely or that worries you?
No, we watch the matter closely for a while. I think that our exposure in commercial real estate is quite well managed. 80% is in Switzerland. We have around CHF 3.5 billion, so 10% in the US, loan-to-value at around 60%. So we believe that in the US, for example, if we have a drop of 30% of valuations, we would probably only have to put aside a couple of hundred million CHF in terms of provisions because the owner of those assets are wealth management clients typically or well-placed, high-quality locations. So for us, this is not really an issue. In Switzerland, we have a very healthy portfolio, again, diversified, 46% loan-to-value. Yeah, I mean, look, this is not an issue for us.
Okay. That's clear. Thank you. And then before I open it up to the floor, I'll ask one last question on capital distribution. So we know the message for 2024, which is CHF 1 billion buyback after the merger of the legal entities. But then if we look forward to 2025 and beyond, so shall we assume that every year basically comes year-end, you look at capital above 14, you distribute everything down to 14, or that's more what you're going to do in the outer years, but in the first years, you're going to keep a bit of a buffer to that?
So first of all, our priority now is to get the parent bank and mergers and then execute of this CHF 1 billion. In order to do that, by the way, and I think it's very important for everybody to fully understand that we are now the current buyback program is expiring soon in the next couple of weeks, and then we're going to have to relaunch a new buyback program to file it to the exchange. And this has to be seen as a buyback program that is not a leading indicator of what we intend to do in the next two years, right? So this is purely technical elements to be ready to execute on the billion for 2024. So for 2025, again, I think it's premature to discuss about 2025, but your point is still valid to be addressed.
I already mentioned that we are not in a policy of doing capital return that are on and off. Therefore, you can expect us to continue to do share buyback. The size of those share buybacks will be determined on the progress we make on our journey. And it's correct to assume that around 14%, meaning 13.8%-14.2%, so this is what we mean by around 14%, is the anchor of what we believe we need to hold not only through the next couple of years as we execute but also going forward in order to have enough buffers to the to-be-implemented capital regimes. So in that sense, our ambition to distribute by 2026 or to exceed what we did in 2022 is still valid.
Perfect. Let me pause here with my questions, and let's see if we get some questions from the audience. Otherwise, I have a few more. Okay. I'll ask a couple more while you think about some questions. So if we look at balance sheet optimization, the 510 billion RWA number that you gave surprised the market. Ourselves and consensus were much higher than that. So again, aside from the non-core unit, which we understand is coming down, where are the other best opportunities to optimize the balance sheet?
Well, as I mentioned before, mainly through by merging, so there are different elements that come through because we have headwinds in the full implementation of Basel III of the Credit Suisse portfolio because they are a couple of years behind the UBS in terms of.
No, I think it's okay.
Are you okay now?
Yes.
Okay. All right. So the optimisation is other than headwinds is coming from, as I mentioned before, rationalising the use of free-to-carry assets across all businesses, right? So of course, wealth management, I mentioned it to some extent in the Swiss bank. I mean, we have areas where we have mono-product offerings that don't cut even remotely the coverage of capital. So we need to address this one. But essentially, the surprise you mentioned, I think I fully understand the surprise, but I think that the response was also the coherence of showing that we will not grow assets, net new assets because of that. And as I said before, our top strategic goals is to take down cost, achieve our cost targets, and achieve the 15% exit rate return on CET1. And therefore, what we said, we are willing to sacrifice growth short-term.
That's the reason we can rationalize coming down with free-to-carry assets. Otherwise, it would be impossible. It's all about benefiting from the diversification but also putting a different discipline in managing the balance sheet.
Perfect. I'll ask another one on so if I look at your geographical footprint, and Asia is an interesting one where UBS was already number one by a mile and now is even bigger with a different geographic footprint coming in from Credit Suisse. So how do you see there the growth opportunity versus the geopolitical tensions that we see, especially in China?
I see that as definitely some things that will create probably more volatility over time in terms of how we grow. But still, it's not going to take away that more than half of the population in the world lives in that part of the world. And therefore, I think that it's not only a China strategy. If I look at Southeast Asia, if I look at our combined capabilities in Australia, our enhanced capabilities in Japan by putting together so across the board, what I think that we are really getting out of this is the benefit of an even higher diversification that may compensate for potential geopolitical ups and downs. I think that we are very committed to Asia. We are very committed to developing also our China business going forward.
Of course, but we have to recognize that even according to the governments, their ambitions for a 5% GDP growth over the next few years is going to be challenging. Therefore, we need to assume that it's going to be also more bumpy in the way they're going to get there. But I'm very convinced that for us, it's absolutely critical to continue to invest in Asia and continue to be a leader there.
Understood. And how do you think the investment bank augments your wealth franchise in the APAC region?
I think not only in Asia, generally speaking. I take Australia as a good example. We are the number one investment bank franchise in Australia. We didn't have any wealth management operation. Credit Suisse brought a very good operation in wealth management. Now, we can leverage the IB franchise into wealth management in Australia in a way that we couldn't do it before, so replicating very much what we do in the rest of Asia. But I think this is also absolutely critical in the US. The US is where we got through the 1,600 people that we onboarded in the UBS platform from Credit Suisse, two-thirds are banking people. And they're going to help us in healthcare, in technology, in consumers, in different aspects of banking that has an affinity to our wealth management business.
This is very important for us to create net new assets and create opportunities to really sell a more comprehensive offering to our clients.
Thank you. Let me see. We have one question over here. If you can put your hand up. Yeah.
Thank you. It's Mark Sheridan from BDL. When we've seen these large transactions and combinations in the past, there's basically been a necessity to lock in key personnel with guaranteed contracts over a period of years, which is necessary for people to buy in and keeping key personnel. But it creates a lot of operating leverage. It reduces margins. We saw that in the case of Paine Webber, for example. Can you just give us some color on what's happening on that front and if there's anything that we should be aware of in terms of those dynamics on the cost side of retaining key individuals? Thank you.
Thank you. Look, in 2023, of course, like in any merger or acquisition situations, you go through a process of doing retentions not only for client-facing people but also for operations. I mean, I mentioned before the fact that we are running two banks. We need to keep everybody motivated to run the banks. So I think that we have been implementing retentions in 2023 to address this one. To your point, which I think is more about the front, I think that if we can say fairly modestly, but I think it's accurate, we believe that we don't need to convince people to work at UBS based on retention and multi-year retentions. If people buy into what we do, they are more than welcome, and we're going to be successful together.
If people want to have a rolling floor on how they get paid regardless of performance, we're going to stay friends or maybe good colleagues, but that's not the place to work. So it's not something that will be part of our philosophy, and we have to do and embrace a different way of creating value.
Do we have other questions? Yes. Here.
Richard Jenkins, Black Creek. We've just been through a decade of zero negative interest rates, etc., and you're merging a Swiss-based bank. Are there any really long-tail liabilities that worry you inside of that portfolio that you're acquiring that are related to a mindset of negative or zero rates for a decade-plus?
No. The answer is very straightforward. No, I think that, look, we took a very diligent view on assessing the assets, the most risky part, and you saw us taking decisive action in the first 3-4 months, particularly when we addressed the topic of giving back the guarantee to the Swiss governments. And as we went through all that process, we also took PPA adjustments on any position that we took we thought would necessitate an action. And I'm very comfortable with the quality of the asset base and/or the marks we have in our current exposure. So any historical aspect has been addressed through the PPA adjustments.
You have a follow-up?
Yes.
Yes?
Just a follow-up. Is that working? Okay. The next question is more about you came back, merged the two organizations, get it through the next 3-4 years. But you must have a view to what the bank looks like 10 years out when you decide how big you want to be in certain segments, etc. Can you give us some insight into what that might look like long-term? I know you didn't want to talk about short-term performance, but can you give us an idea of why do you want to stay in certain segments long, long-term?
Well, I don't want to talk about short-term, and I'm not smart enough to talk about the next 10 years. What I can tell you is that where I want to be the bank at the end of this journey, 2027, 2028, to be a bank that can consistently deliver superior returns on its capital and is still a very asset-gathering-centric organization. And in that sense, I do think that when you look at our ambitions to get to 5 trillion and so on and so forth, and if I look at the underlying trends supporting both our wealth management and our asset management businesses, they are quite promising. So I don't see any reason for us to go away from this kind of niche. It's quite unique. So I do think that what we need to do is to have a better footprint in the US.
If I look at what is still missing, is that we have the cost base of a much larger organization in the US, but we don't have still the product capabilities that allow us to fully leverage our global franchise in the US. That's the real five years, not 10 years. 10 years is too long. But five years, this is the target. The next couple of years, integration, preparing for the next wave of growth, and then we'll take it from there.
Can I follow up on this Americas' point? So $1.9 trillion in client assets, it's a huge part of your wealth franchise, and yet we have seen PBT go from $2 billion to $1 billion. So what is the plan really to bring this up back to or even in line with peers? Because if I look at the next peer, margins are much lower.
No. First of all, what we need to do is to institutionalize our relationship in the U.S. much better by having a broader credit offering, a broader offering in terms of deposits. So institutionalize relationships in a way. Then we need to bring more of our global capabilities, the CIO offering, to our clients. We need to do a better job in leveraging the family offices business. So we are still, relatively speaking, under-penetrated, although our financial advisors have, on average, the highest level of assets per financial advisor in the industry. But still, we are still not yet penetrating enough the family offices businesses, which in itself shows you our biggest potential. As I mentioned before, we need to also leverage more the banking platform we have in the U.S. I'm convinced that the investment bank is going to offer us a leverage into that, as I mentioned before.
Over time, I'm convinced about that. Now, to the point, for sure for the next five years, I don't think it's realistic that we're going to close the gap to our peers in the U.S. Like they're not going to close the gap to us internationally. I mean, our margins outside the U.S. are not easy to be matched by our U.S. peers. Their margins in the U.S. are not easy for us to be matched. So what it's all about is to narrow the gap in the U.S. For us to make a real difference, we need to narrow the gap, not to try to close the gap and be totally unrealistic about how fast it can happen.
Okay. Thank you. And would you contemplate looking at different channels in the US other than just the FA channel? Or at the moment, you're focused on FAs?
The focus right now is executing on what we have on the plate in 2024, 2026. As I mentioned before, institutionalizing more the existing clients and infrastructure. We're going to take it from there and evaluate what is the best way to go to the next chapter. It's premature right now to talk about how we're going to do it because it also depends on how the situation will evolve.
Thank you very much. So let me go back to the audience if we get other questions. Okay. Then I have space for another one. Sorry. I'll continue on the U.S. if I can. You have looked at this before. I remember in 2018, the Investor Day, on how we're going to revamp technology, etc. What is different this time?
What is different is that I think that it's fair to say that in the last few years, a couple of years, probably, we haven't managed a couple of projects on the IT side the way we should have done it. So lessons learned there. And number two, that relying too much on NII as a steady development with rates going up was probably the wrong assumption because it's clear that the NII volatility, the spike effect that we have higher rates has delivered disappointment. So it's a combination of topics. And in my point of view, what was very positive in 2020, 2021 created probably an excessive reliance on that kind of model being enough.
NII, yes.
The truth of the matter is that we need to work harder and get to a better position going forward. So it's more about learning our lessons. Of course, you have to understand that this is something that took a lot of time. I remember even my predecessor in the first round inherited a business that was losing $500 million a year. And I remember early days in 2012, 2013 that when we wanted to aspire to make $1 billion, people thought that we were totally out of control and we would never achieve $1 billion in the U.S. So the journey has been volatile. But I do believe right now we are well-positioned also as a global organization to sustain a more quality growth in the U.S. going forward. So I think that's the priority.
It's good to have other levers than just the U.S. for us to create value for shareholders.
Thank you. Do we have questions from the audience? No? Okay. Let me go back to a point that you mentioned earlier on. You said you're very focused on not letting people be distracted by restructuring, essentially. So how do you achieve that? How do you make people focus on getting new business or, yeah, pursuing your growth ambitions ultimately rather than getting lost into the restructuring?
Well, it's a series of issues. It's not just one. But as I mentioned before, trying to isolate as much as you can people's daily tasks on integration from the rest of the organization, defining clear objectives, quantitative and qualitative objectives for the rest of the organizations, and making people accountable for what the journey is. So I think that it's all about making sure that people have clear objectives in mind. I go back to the question I got before. The days of the integration and so on, people are now focused on delivering the next three-year plans. It's no longer around stabilization of the franchise. So I think that it's fair to say that that time is over. So the time of stabilization, uncertainties is over. People know what is the journey. We addressed during the summer the target operating model also for Switzerland during the summer.
Everybody knows the journey. We are not really expecting people to be too distracted by that but rather focusing on clients and delivering on our plans.
Thank you. If I can ask a question on Switzerland, well, I have a few questions on Switzerland. But let me start with one. There was an article a couple of weeks ago about competition, a competition authority, and arguing that UBS is now too big, especially actually in the investment bank side rather than loans and deposits. How do you address this point locally?
Well, first of all, I think that it's quite clear that one of the conditions for us to take over Credit Suisse was not to get any limitations from the competition authorities in respect of our integrated business. So we believe this is a very strong element of what has been agreed over the weekend. Therefore, we feel comfortable. Now, other than that, facts told us a very clear story. We don't have a dominant position in Switzerland. I mean, it's a fact. You look around cantonal banks, other regional banks, across the board, they have equally or higher penetration in mortgages, in deposits, in loans to SMEs. If I look at your example in the investment bank, if you look at the last six months' developments, our market share, it's absolutely normal. And in investment banking, the notion of monopoly is absurd.
There is no monopoly in the investment bank business globally because the barriers to entry are very low. If anybody abuses any position, it takes 6-12 months for a competitor or a group of competitors to spot the opportunity. So I don't see this, broadly speaking, but also when I look down to any of the topics that would sustain any claim of monopoly or dominance, there are no facts. And this is according to official statistical data. So we are very comfortable that at the end of the day, things are going to be addressed in the right way. Of course, we understand that the question comes. We understand that people need to look into it. But it's a completely different matter than thinking that it's going to translate into any limitation to us.
Perfect. And same on the topic of Switzerland. So you saw some money coming back after you acquired Credit Suisse. Do you think that opportunity you have now taken what you had to take back? Or is there still an opportunity, actually, to win back some market share in the local market?
A lot of assets in the local markets went to cantonal banks. I think that we already saw some flowbacks. As I mentioned before, what we have to focus on going forward is not just the obsessions of getting new assets, right? It's absolutely to really understand what is the return of those assets. We have to also look at pricing. I mean, not all the competitors in Switzerland are paying the same level of taxes that we pay, right? And they have an advantage in pricing and doing things. So we can leverage that gain. We're not going to go out and attract assets by undercutting prices or subsidizing prices. So we have to take the discipline and accept that maybe we need to accept a lower path of growth for the next couple of years to reinforce the solidity of our financial results.
Clear. Let me give another chance to yes. We have another question.
Yeah. Hi, Mark again. Just on the capital requirements, I think you said you're going to run the bank at a 14% CET1, if I'm correct on that. What's the next stage of potential capital requirements from FINMA? And also maybe in the context of capital, maybe you could give us your view on what's going to happen in the U.S. in terms of Basel III finalization and how that would impact you, if at all. Thank you.
Well, actually, I don't even know what the Swiss authority will do. So I'm not going to pretend to know what the US one are doing. But I don't expect I mean, if I look at the matter, in a couple of months' time, we're going to have a better indication of what the Swiss government wants to propose in terms of a revised Too Big to Fail law. I honestly don't expect a major change in the capital requirements because if I look at any major authorities, that's foreign authority, the FSB, but also a group of Swiss experts, nobody pointed out the fact that lack of capital was the reason why Credit Suisse had an issue. But I can't rule out what it is because I don't know what they are coming up to.
Reasonably speaking, I think I do expect maybe some areas of needs of intervention around how to manage the asset side, how to make the asset side of the bank more liquid in case of stress, eligibility to central bank funding. I do expect improvements in terms of introducing a public liquidity backstop, for example. I do expect a better legal framework around recovering resolutions, so empowering the regulator to take actions not based on emergency laws. So I do expect that part of the equation to be addressed. I don't think capital is something that we should expect. But I can't rule it out.
So I think that what is more important, maybe taking back your aspect about the U.S. and globally, of course, what we hope for is that despite the fact that every country or region has its own peculiarities and maybe some adaptation of Basel III needs to be accepted. I hope that globally an understanding that Basel III is the framework around which everybody agrees to operate would be welcome, particularly for a global bank. It's very important to be able to compete eye to eye with others. So in that sense, Switzerland and UBS specifically, I would say, has been at the forefront of implementing Basel III. We feel very comfortable about that. And therefore, we are well-prepared. That's the reason why we don't also have a lot of headwinds from Basel III in the final introductions.
Lovely. With that, I think we have run out of time. But Sergio, thank you very much. And thank you, everyone, for listening.
Thank you.