The decision on the fate of CS Switzerland will be postponed to the end of summer

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The takeover of Credit Suisse presents UBS with difficult decisions. UBS boss Sergio Ermotti (63) hit a few nails with the transition to group management. But it delays the hardest part: Should CS Switzerland be fully integrated or should it survive as a standalone bank? As you can hear from inside the bank, the disclosures should take a few more months. The decision should be made by the end of summer at the latest.

An immediate and rapid full integration of the bank would be the ideal scenario if Ermotti wanted it. This has been confirmed by several sources in their opinion on Sunday. However, this ideal scenario comes at a high cost because full integration would cost a lot of work. Up to 20,000 jobs are at stake in this scenario. Thousands of workers could lose their jobs, not only in Switzerland, but also in processing and IT centers in Poland and India.

CS Switzerland’s split will be less harsh. Branches may remain, while independent central services and everything else needed to run a bank, from stock analysis to servers in the engine room, will still be needed. If there were jobs, very little would have disappeared.

You don’t need to be a seer to realize that it is much easier to realize the desired scenario. It will also bring significant efficiency gains for UBS, able to generate higher revenues and more profits through lower costs.

On the other hand, a split is laborious and difficult. The international parts – business with wealthy clients, wealth management, investment bank – should be integrated. The Swiss bank, which is also linked to international units, must be unbundled and placed on a solid footing.

What happens to the fillet?

It is unclear whether an independent CS Switzerland can continue to play a dominant role in the corporate client business – the true fillet piece. At the same time, it remains unclear what UBS intends to do with full integration with the so-called enterprise business. This uncertainty is the biggest concern of business representatives. “I have yet to hear from Sergio Ermotti of his commitment to continue running a corporate bank in Switzerland. This is a mistake,” says an industry representative.

It will be much more important now that other banks take steps to breach. However, as the canton’s largest bank, ZKB does not seem to have much desire to expand its corporate client business. “ZKB’s absorptive capacity, like other banks, is limited,” ZKB boss Urs Baumann (55) said in a recent interview. He hypothesizes that the volume “will be increasingly distributed internationally in the future”, which he finds “embarrassing”.

Zurich Senior Vice-President, politician and banker Thomas Matter (57), considers “his” cantonal bank a duty to support the economy. “It is ZKB’s duty to provide financial services to companies in the Zurich economic region, including the surrounding cantons.”

Matter believes that ZKB has sufficient financial resources to “proportionately” expand its corporate client business. “You don’t have to raise any new equity for it,” he says. According to Matter, there are other banks in Switzerland that could take steps to breach – for example Raiffeisen, also West Switzerland Cantonal Bank BCV and Geneva Cantonal Bank.

Source :Blick