Swiss perspectives in 10 languages

Doubts continue to surround Credit Suisse takeover

Credit Suisse building under stormy skies
The Credit Suisse takeover by UBS has been agreed but not yet carried out. © Keystone / Michael Buholzer

The rushed takeover of Credit Suisse bank by UBS continues to raise concerns within Switzerland.

The Swiss government invoked emergency powers to force the deal through on March 19 with Credit Suisse on the verge of collapse.

+ Why a monster UBS bank scares Switzerland

But mergers between such large banks come with significant risks, according to Arturo Bris, professor of finance at the IMD Business school, who has examined 1,000 deals between 2002 and 2022.

“Mergers between established banks like UBS and CS, which are no longer growing rapidly and are less profitable than their competitors, almost never work,” told the Tages Anzeiger newspaper. “On average, post-merger profits are 4% lower than before the merger.”

Philipp Rickenbacher, CEO of Julius Bär bank, sees a long road ahead before the takeover can be deemed a success.

“An integration of that order of magnitude in Switzerland is going to take a lot of resources and effort, and a lot of complexity,” he told the Financial Times.

Julius Bär has seen inflows of client assets from both Credit Suisse and UBS in recent weeks. And the private banking group has been contacted by many Credit Suisse staff asking for job opportunities.

+ How to fuse two giant Swiss banks

A poll last week of Swiss economists found that nearly half think the takeover of Credit Suisse is not the best solution and warned that the situation has dented Switzerland’s reputation as a banking centre.

Both Bris and Rickenbacher believe that states should not have to intervene to save banks from collapsing.

Financial regulations, drawn up after the 2008 financial crisis, should have made it possible for Credit Suisse to go bust in an orderly fashion.

“Too Big to Fail [regulations] were designed to solve one problem…and in this case they could not solve that problem,” said Rickenbacher. “[My] gut feeling and moral compass says that a private institution should be able to fail.”

News

In compliance with the JTI standards

More: SWI swissinfo.ch certified by the Journalism Trust Initiative

You can find an overview of ongoing debates with our journalists here . Please join us!

If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.

SWI swissinfo.ch - a branch of Swiss Broadcasting Corporation SRG SSR

SWI swissinfo.ch - a branch of Swiss Broadcasting Corporation SRG SSR