The matchmaking of UBS and Credit Suisse will create the biggest bank Switzerland has ever seen. Some wonder if the superbank might be too big for its good.
The agreement reached late Sunday avoided the failure of the country’s second-largest lender by combining it with the largest.
Even before last week’s dramatic events, UBS and Credit Suisse were among the 30 globally considered strategic to the global banking system and thus too big to fail.
Some in business, industry, and politics are skeptical that a larger bank will be beneficial.
There is less rivalry.
“This is where the question of what skills will be retained arises,” said Cordonier. Noting that the profiles of the two banks, while similar, are not identical.
Many issues remain unanswered so far.
Normally, such a takeover would require months of negotiations. But UBS only had a few days thanks to some significant arm-twisting by Swiss authorities.
At an analysts’ conference, UBS CEO Ralph Hamers acknowledged that he did not yet have all of the details of the takeover.
Switzerland is a confederation of 26 cantons. Cordonier believes the option could be a shift away from national banks and towards cantonal banks.
However, many do not presently have the skills to assist businesses in exporting to distant markets such as Asia and would need to learn them.
The other choice is to turn to international banks, though they would lack “in-depth knowledge” of the Swiss market, according to Cordonier.
Founded in 1856 by Alfred Escher, the godfather of Swiss railways. Credit Suisse was closely linked to the country’s economic development.
The bank financed the expansion of the rail network. The construction of the Gotthard Tunnel beneath the Alps, and the start-up of Swiss companies that went on to become leaders in their sector.
“Twenty-five years ago, there were four big Swiss banks,” recalled the Swiss Federation of Companies. Which represents small and medium enterprises.
The banking sector has already seen major convergence in 1998 when the Swiss Bank Corporation merged with the Union Bank of Switzerland to form the modern UBS.