UBS chairman Axel Weber tells us why bullishness about the global economy is ‘to be too good to be true’

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March 7, 2018 9:26 AM

BI PRIME: "One of the underrated risks is that inflation will pick up more than current central bank projections are showing," UBS Chairman Axel Weber said.

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Zurich, Switzerland — Markets may be calm and economic sentiment good, but Axel Weber, UBS Chairman and former German central bank chief, isn't convinced.

Speaking to Business Insider in Zurich last month, shortly before the sharp market correction in February, Weber voiced concerns about inflation, saying central banks may have to react swiftly to tame rising prices as salaries increase.

We talked in a meeting room in a separate building to the UBS headquarters in Zurich, which was being renovated. Downstairs at the entrance, the windows bear scars of an attempt to smash them. Almost 10 years have passed since the Swiss government injected billions into UBS at the height of the 2008 financial crisis, but, while the bank's finances have long been back on track, a reputation takes longer to fix.

For Weber, managing staff behaviour through incentives is one of the keys to regaining external trust. The strategy is working, senior executives have more skin in the game with long-term bonuses that get wiped out if the bank loses its financial footing, but he is clear that "cultural change doesn't happen overnight."

The interview below has been edited for length and clarity.

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