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Sergio Ermotti (63) is the most wanted man in the Swiss business world. UBS CEO states confidently when asked about the Credit Suisse takeover. The Ticino resident smiles amiably at concerns about the new bank’s size, or tries to put them into perspective.
The situation was the same at the Zug Business Day at the beginning of September. Asked whether the new UBS was “too big to fail”, Ermotti said: “We consider ourselves the leading bank in Switzerland. But we are not the largest bank. Statistics clearly show that the cantonal banks are larger in total than UBS.”
Ermotti’s comparison is inaccurate
It’s a comparison that UBS has been tossing around for months and has experts shaking their heads. The reason: unlike UBS, cantonal banks are not a single financial institution but 24 independent companies.
Christian Leugger, deputy director of the Swiss Association of Cantonal Banks (VSKB), therefore emphasizes: “In our opinion, it is inappropriate to compare the 24 cantonal banks ‘en masse’ in terms of system relevance to UBS.”
What does UBS say to this criticism? The media office stated that Ermotti’s statements regarding the market and competitive situation were made upon request. A spokesperson explains: “The market share of cantonal banks is larger than that of UBS and CS combined, not only throughout Switzerland but also locally in almost all cantons.” According to the Central Bank’s statistics, large banks are not market leaders in all important areas such as mortgage and deposit markets and loans to public companies. “According to public statistics, UBS ranks only third in terms of number of branches after the merger.”
24 independent financial institutions
These statements are undisputed. However, the question remains whether the comparison with “collective cantonal banks” is meaningful. According to VSKB’s Leugger, it is clear: “You can certainly compare bank groups with each other. But absolutely no market power or systemic interest of an individual institution can be inferred from this.” The figures show, first of all, that the banking style of the cantonal banks is successful.
Cantonal banks are not a group, but 24 separate companies with their own legal personality, completely independent of each other. “They do not have a common strategy for market development and there is no agreement on market behavior,” says Leugger. On the contrary, cantonal banks are in healthy competition with each other.
The Competition Commission (Weko) is also currently dealing with the consequences of the takeover of CS. The company’s director, Patrik Ducrey, 60, does not want to comment on Ermotti’s agreement due to ongoing litigation. However, he announced that Comco’s statement regarding the merger will be sent to the Financial Markets Authority (Finma) soon and that it will then finalize the process with its decision.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
