“Now UBS will be distracted”

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Credit Suisse did not hold candles to UBS for long. At the end of 2022, its total assets were only half that of UBS. Yet CS has so far been UBS’s biggest competitor in the Swiss banking industry. Raiffeisen, Zürcher Kantonalbank and Postfinance follow international heavyweights from a considerable distance.

Now UBS’ last major Swiss competitor is disappearing. And that’s not all: UBS is buying its old competitor at a bargain price of 3 billion francs! This is despite the fact that CS’ market cap was more than doubled last Friday. “UBS got a gift,” says Sergio Rossi, 55, Professor of Macroeconomics and Monetary Policy at the University of Freiburg.

UBS has been out of the way for years

However, fungi are very unlikely to erupt on UBS carpet floor at this time. Because CS and UBS bring risks as well as opportunities. “Now we need to see what UBS does with this giveaway. At the end of the day, there can be a loss, too,” Rossi warns.

After all, in case of loss, UBS can count on federal guarantees of CHF 9 billion. However, these only come into play when losses cross a certain threshold.

Rossi says that UBS management absolutely did not want CS. “The pressure to take over was huge. But it’s not a win-win situation.”

Economist Klaus Wellershoff (59) sounds the same horn. “UBS was in full swing towards achieving its strategic goals,” Wellershoff told Blick TV. “Now he will be distracted for a long time and take over any business risk.”

Skepticism in the Markets

Experts and bank analysts unanimously agree that the marriage of UBS and CS was not voluntary, but imposed on the two banks by the Federal Council.

UBS takes over a sick competitor that loses billions of dollars each quarter. Turning this troubled bank into a valuable business in the long run will be a challenge for UBS.

In light of this, investors are still skeptical as to whether UBS will be truly happy about CS’ takeover and its new monopoly. UBS shares started the trading day with big discounts, but turned the afternoon loss into positive territory.

But even if the UBS leadership under President Colm Kelleher (65) and CEO Ralph Hamers (57) doesn’t quite rub their hands in the face of challenges, the takeover is still better than the alternative: CS bankrupt in shockwaves. The entire global banking industry.

Source :Blick