Georgia Paphiti: “Diversification is a vital element in becoming a formidable innovation hub”

Luxembourg-based Georgia Paphiti, Chief Financial Officer EMEA at UBS and a Member of the Management Board of UBS Europe SE, talks about the evolving role of the CFO, the value of cooperation and authentic leadership, and how she succeeded in asserting herself in a male-dominated arena.

It has been a long, miserable day in May by the time Georgia Paphiti arrives at the studio for our interview. The weather at this time of the year is full of paradoxes, just like the woman in front of me. She’s dressed all in black, plus a pair of sneakers (that she exchanges for heels for the photo) but her warm smile, accompanied by an intelligent glint in her eyes, has immediately erased all thoughts of a cold exterior, which I had wrongly expected to face when I first reached out to her.

Our meeting takes place shortly after good news was published regarding a reported 71% increase in UBS’ first-quarter net profit, reaching nearly $1.8 billion and far surpassing expectations, after experiencing two consecutive quarters of losses due to last year’s takeover of Credit Suisse. UBS is now Switzerland’s biggest bank and, as such, a key pillar of the global financial system.

“The acquisition accelerated our existing strategy by strengthening our presence in key markets, expanding our client franchises and adding complementary capabilities to our offerings,” explains Paphiti as she settles down across from me. “It also brought client assets equivalent to 7-10 years of organic growth, necessitating a careful integration process expected to be completed by the end of 2026. While we anticipate foregoing previous profitability levels until 2027, this aligns with our commitment to long-term growth and sustainable higher returns. In the fourth quarter of 2023, we completed the initial phase of integration, stabilized the franchise with €77 billion in net new asset inflows, and achieved underlying profitability since the acquisition, with approximately €4 billion in gross cost savings in 2023 and a strong capital position (14.5% CET1 ratio).”

The Grand Duchy of Luxembourg has been Paphiti’s home since 2014. “Sometimes, if someone offers you something really cool, you have to say yes!” she says, by way of explanation. Luxembourg is about a quarter of the size of Cyprus but the comparisons stop there. Due to its auspicious location, Luxembourg enjoys a rich and diverse workforce from surrounding nations such as Germany, France, Belgium and the Netherlands; and since it is located between the biggest European economies and is one of the founding countries of the EU, it hosts various European Commission bodies, thus creating an international cultural and business ecosystem with a big talent pool, enhanced by political stability and diversification.

“If you go back in history, Luxembourg once had a strong steel industry. However, when it started declining, the country diversified,” Paphiti tells me. “Diversification is a vital element in becoming a formidable innovation hub. In Luxembourg’s case, an important element adding to its success is the Private-Public Partnerships (PPP), which is not very common in Cyprus. There, the state and the private sector invest with common objectives, they have a niche and a very clear strategy. This commonality of goals between public and private sector is very important. One example is the Luxembourg House of Financial Technology (LHoFT), which is basically focused on Fintech and is Luxembourg’s Innovation hub, and another is Luxembourg for Finance, which is the financial centre development agency.” Luxembourg is the largest investment fund centre in Europe (and 2nd in the world) with over €5 trillion in assets.

In Paphiti’s view, Cyprus is in dire need of diversification, a robust regulatory framework that exudes trust and reliability, and strong leadership to unite the public and private sectors if it is to become an innovation hub. Despite the unresolved Cyprus Problem, the island still holds an enviable geopolitical location, rich agriculture opportunities and a wide-ranging university ecosystem that can foster the future diverse workforce of the island. There is potential, she concludes, but Cyprus lacks strategy and unity. “There is no commonality in goals and I don’t think Cyprus has found its niche yet, so there is no long-term strategy to get the economy where we want to go,” says Paphiti.

“Why is that?” I ask.

“I think that sometimes we focus on too many things at the same time. The question is: what do we really want to do? Imagine that you’re a restaurant and you offer 200 dishes, cooking every dish every single night. Then a customer chooses just one of the 200, that you may not have executed well. They won’t be coming back! The same applies to every business,” she says.

Georgia Paphiti has been a part of the UBS family for over 20 years. She figured out quite early that nothing would be good enough for her if it didn’t challenge her or push her out of her comfort zone. Being a CFO today is a highly multifaceted role. It translates into being a relationship manager, whether it’s about stakeholders, regulators, the CEO or the team surrounding you. “You have to be close to the business” she tells me with an unwavering gaze. “Fifteen years ago, CFOs would probably work on financial accounting, reporting and controls but now it’s a completely different game. You have to be technically competent, but also possess interpersonal and leadership skills, understand stakeholder management, be a people manager, a risk manager and a challenger; you have to juggle everything at the same time.”

“It sounds exhausting,” I comment.

“It’s actually pretty fun!” she says, laughing. “It’s about doing something that matters to you, being proactive, coming up with ideas, helping drive growth, being technology savvy – so many things that keep the job pretty interesting. And then, there’s culture and being a role model for your team. You need to cultivate a collective culture and common goals, make sure everyone understands them and the value of the output, and ensure that they have the mindset to actually drive the business forward.”

The position of CFO is clearly not for the faint-hearted. As she explains, balancing short-term financial goals with long-term strategic objectives requires a meticulous plan, a deep comprehension of goals, and answers to a range of hard questions: “What do you need now? What will you need later? What’s your crisis fund? What is the capital that you can risk? What are you willing to lose?” and many more.

Against the backdrop of these constant dilemmas, CFOs are also called to handle unexpected crises. Talking about losses and risks serves to remind me that an armed conflict is currently taking place in our neighbourhood, affecting energy prices and financial markets around the world. Has it had an impact on Paphiti’s CFO role?

“While international crises often have only a temporary effect on global markets, uncertainty persists, leading many investors to increase their holdings in certain commodities to improve portfolio resilience. Although it may take time, expected rate cuts could positively impact financial markets. Given the typically brief impact of international crises on global markets and potential easing of rate policy, the outlook for financial markets remains neutral. However, this does not overlook concerns about market volatility and geopolitical risks; investors may rebalance portfolios, increasing exposure to assets like crude oil and safe havens such as gold” she says and adds, “When energy prices rise, it can have two effects: it increases manufacturing costs, which may lead to higher prices, and it reduces disposable income, which can lower demand and prices. Central banks aim to maintain stable inflation at around 2%, so they may tighten monetary policy by raising interest rates when inflation exceeds this target. Interest in renewable and alternative energy sources has grown due to a focus on sustainability, while Europe’s dependency on Russian oil and gas became clear once the war between Russia and Ukraine caused energy prices to surge. This awareness may drive further innovation and investment in alternative and renewable energy sources.”

As we sip our coffee, I note how Paphiti exudes an aura of confidence and authenticity that I don’t get to see very often. Whether this can be attributed to Luxembourg’s cultural ecosystem, her personality, or the fact that she is a woman who has succeeded in a male-dominated arena is hard to tell. There are many colourful and peculiar puzzle pieces that stillI need to be put together.

Whatever impact gender-based preconceptions may have had on Georgia Paphiti, they have evidently not deterred her from becoming a compassionate leader. “When I started my career, the sector was very male-dominated,” she recalls. “I thought that the difficulties I faced as a woman were due to the fact that Cyprus is a small place but, in fact, I faced them when I moved to Europe as well. Thankfully things are getting better for everybody! My team and I are involved in all sorts of diversity and inclusion initiatives, creating awareness and making sure that women – or anyone else for that matter – in the workforce are not discriminated against. I can give you a lot of anecdotes of the situations I faced, though I didn’t always take everything seriously,” she tells me with a glint in her eye. “But I certainly stood my ground and would not take no for an answer when I was challenged for being a woman in a male dominated profession.”

Paphiti says that she and her team try to make a difference every single day. “Anything we do has to matter: It has to matter for the business and it has to matter for us,” she tells me. “You cannot expect everybody coming out of university or being new to a job to have this kind of mindset. That’s the job of a leader as well: you have to get them there, you have to inspire them, be compassionate and strict when the moment demands it; you have to pull them together, give them motivation!” she says, her hands moving in sync with the animated tone of her voice.

As our photographer intrudes discreetly, signaling that it is time to take some pictures, I observe how easily she engages with him and feel the silent strength of her presence. Suddenly everything clicks into place. It’s her openness that has led her to welcome the opportunities that have come her way and enabled her to strive for the impossible by making it sound as easy as posing for a photograph.

(Photo by TASPHO)

This interview first appeared in the May edition of GOLD magazine. Click here to view it.