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Commerzbank is doing better than it has been for years. This could also be good news for Swiss SMEs. Germany’s second-largest bank is looking to expand its business in local corporate clients and fill the gap that is gradually starting to emerge in the Swiss lending landscape, twelve months after UBS acquired Credit Suisse.

Double-digit growth

“We want a big piece of the pie,” said Marc Steinkat, head of Commerzbank Switzerland. The 56-year-old came to Zurich almost a decade ago to provide export financing and other related financial services to local industrial and trading companies. “We have grown by a double-digit percentage every year” and expect an acceleration, the manager emphasized in an interview with CH Media.

Steinkat speaks knowing that foreign banks in Switzerland are not having an easy time: in October, the trade association Swissmem asked its member companies whether they trusted that foreign credit institutions would successfully step into the breach of Credit Suisse. Only just under 30 percent said yes.

Negative experiences from the financial crisis continue to resonate

Jean-Philippe Kohl, deputy director at the important trade association, knows why: “Swiss SMEs express their skepticism that they expect a long-term and weather-proof partnership from their lenders.” The negative experiences they had during the financial crisis still resonate in some companies, says Kohl: “The first to leave the country at the time were the foreign banks.”

Steinkat emphasizes even more strongly the perseverance of Commerzbank, which it has also demonstrated in Switzerland in the recent past. The negative interest rate regime in Europe took its toll on the Frankfurt institute and drove the group deep into the red in 2020. This was followed by a profound reduction in employment and costs. Also in Switzerland, the network of six branches established in 2014 in almost all parts of the country had to be concentrated in Zurich.

The effort seems to have been worth it

“We have learned a lot, sharpened our business model, placed more emphasis on trade finance and better differentiated Commerzbank’s added value from other banks,” says Steinkat, summarizing his years of training in Switzerland. The effort seems to have been worth it. “Our customers really encourage us to continue growing in Switzerland,” says the manager, who became Swiss himself in 2020.

According to its own information, Commerzbank has outstanding credit obligations to Swiss corporate customers amounting to 11 billion francs. This is no piece of cake. By comparison, private companies with 50 or more employees across Switzerland are currently taking out non-mortgage-backed loans totaling around 60 billion francs. Half of these loans are unsecured.

National Bank statistics also show that the volume of blank loans to private companies with 50 or more employees has fallen by almost 7 billion francs since the end of 2020. The reason for this is not a shortage of supply, but a decreasing demand. Four years after the outbreak of the coronavirus pandemic, a large majority of Swiss companies – including small and medium-sized enterprises – are still soundly financed. “Equity ratios are often above 40 percent and demand for loans is correspondingly subdued,” says Commerzbank.

The demand for credit can change suddenly

However, that can change very quickly. Surveys and statistical observations in the export-oriented Swiss SME segment show that companies’ demand for credit suddenly increases when companies expect significant upward or downward changes in sales. While strong growth spurts typically create a greater need for investment, abrupt revenue losses can lead to a shortage of liquidity.

With two domestic, internationally active major banks on our doorstep, Swiss export companies until recently enjoyed a privileged situation in terms of lending. That will change when Credit Suisse is soon fully absorbed into UBS. “We are now de facto more at the mercy of a big bank and we fundamentally don’t like dependencies,” Swissmem president Martin Hirzel said in a debate with UBS boss Sergio Ermotti in the NZZ in December.

Deputy Director of Swissmem Kohl therefore says about the Commerzbank offensive: “It is only to be welcomed if foreign banks want to get involved in the financing of industrial companies in this country.” There is a particular need in the field of SMEs: unlike large global companies, they obviously do not have a network of banks with international experience. Kohl speaks for an industry that, with more than 330,000 employees, provides export services worth approximately 70 billion francs per year and thus finances almost a fifth of all annual goods imports into Switzerland.

No limits

Marc Steinkat flirts: “If you could re-establish Commerzbank, you would have to do it in Switzerland.” Their ‘extremely strong export orientation’ is the pie that the German entrepreneurial bank would like to get a large piece of in the coming years. “The disappearance of Credit Suisse is a disaster for Switzerland; the bank has long been a pillar of the strong Swiss economy. “The changed situation is now a huge opportunity for us,” says Steinkat. “We are not limited when it comes to accepting Credit Suisse customers and employees, provided they fit our export-oriented business model.”

Swissmem president Hirzel says the medium and large companies in his association have traditionally maintained relationships with foreign banks. “But in times of recession we don’t want to be dependent on them.” However, in many cases such dependence can hardly be avoided. Against this backdrop, Commerzbank’s promise – “we have come to stay” – is certainly worth it, even if the bank has not yet passed the next bad weather test.