Credit, competition and risk: Switzerland needs this financial hub

When it comes to large sums of money for companies – when it comes to so-called syndicated loans – CS was the undisputed market leader. That is, for loans in the range of 60 to 100 million francs, up to two to three billion, which a bank cannot or does not want to manage alone and therefore engages partner banks.

Limited competition selection

“We are an international industry. That’s why we also need an internationally located, eye-level financial partner,” Martin Hirzel (53), chairman of the Swissmem industry association, told Blick on the sidelines of the Swiss Economic Forum (SEF).

“Midsize companies, especially those with syndicated loans like UBS and CS, have to look for new diversification – this is where foreign banks in particular are up for debate.”

But the choice is limited here: British HSBC or French BNP Paribas and of course US industry giants Citibank, JP Morgan or Morgan Stanley might be considered. Deutsche Bank and Commerzbank less so.

A new problem arises: the banker “at eye level” is also someone who speaks the same language and shares the mindset and culture of his customers. “It’s always easier when you know what the other person means and understand what you are saying – this is not always guaranteed at foreign banks,” says Marc Gläser (54), CEO of the Stöckli ski brand.

Swiss solution preferred

Peter Spuhler, 64, boss of train manufacturer Stadler Rail, says there are a few good foreign suppliers that we sometimes work with for exports, too. «But a Swiss solution is always a better alternative!» Spuhler, who, like many at SEF, is saddened by the disappearance of CS, adds: “We have very good cantonal banks that can partially fill this gap.”

But only partially. Because many cantonal banks are too small to fully meet the financial needs of the export economy. Even the largest – Zürcher Kantonalbank (ZKB) – is less than keen to fill the void left by CS’ loss in corporate banking.

fear of distorted competition

Even if there are voices who believe that ZKB can do something, the bank cannot lend at will and therefore inflate its balance sheet. “The demise of CS is a loss for the Swiss economy because Swiss SMEs also benefit from a functioning financial market,” says Stöckli.

So far, the cheap way to raise capital has been a competitive advantage for Switzerland. A few smaller Swiss banks will also need to consider whether and how they can help companies.

UBS boss Sergio Ermotti (63) never tires of underestimating the new UBS’s market power. Yet SMEs fear higher wages or worse credit conditions: “Competition will get worse. Focusing on a big bank isn’t good for anyone,” fears Claudia Willi (52), founder of Treazrly, a software SME in the human resources field.

Companies fear that banking fees could rise if competition is restrained. Andreas Dietrich, 45, professor of finance at Lucerne University of Applied Sciences and Arts, assured: “The margins are relatively low, especially for larger companies, I don’t assume there will be a significant price increase.”

So UBS swallows CS

Date start of the week

What you need to know about the end of Credit Suisse

Red lines – red CS heads

UBS boss Sergio Ermotti ramps up the heat and explains the schedule

Big round of applause for the UBS boss

“We have a tough road ahead of us”

Hard cuts required

The “time of pain” in CS starts now

The right balance of risk and regulation

Michael Escher (50), founder and CEO of Solar 21, a startup founded just two years ago, talks about even a minor disaster. Too much risk has driven CS into the abyss, but it’s not entirely risk-free. “I hope to find the same willingness to take risks for young companies at UBS,” Escher says.

Not too much risk, but not too little – a delicate tightrope walk for any bank. Even a quarter of Swissmem members fear worse conditions for their financial transactions. The question is how can this be avoided? Certainly not through the overregulation of the new Superbank, according to many entrepreneurs.

Trust in Economiesuisse

On the other hand: Weko has yet to comment on the new UBS. The competition watchdogs have nothing to say, but if they raise serious concerns, Finma will have to revisit the notebooks.

One thing is certain: UBS must now very quickly establish the facts of how things will go with all corporate clients for CS Switzerland. The longer the bank waits, the greater the uncertainty. No one can wish for that.

At Economiesuisse, the umbrella organization of the Swiss economy, there is little concern about the Swiss financial centre: “For now, competition is guaranteed and this is very positive,” explains Director Monika Rühl (60). Perhaps because business needs to continue despite all the concerns of SMEs: “We need a strong financial center to remain a strong economy – this is guaranteed by the new UBS.”