A true banking giant is being built on Paradeplatz. If it staggers, the risks are enormous, economists warn.
In the future, Switzerland will only have one big bank – and a real colossus. If you imagine the Swiss economy as a skyline in which the largest buildings stand out, the merged big bank will dominate the scenery in the future.
Thorsten Hens, financial economist at the University of Zurich, makes a comparison with South Korea. There, electronics giant Samsung is the anchor of the country’s economy, which also has a significant influence on politics.
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After the takeover of CS, UBS could once again expand its position as the world’s largest wealth manager.
Keystone/Michael Buholzer
The NZZ makes a drastic comparison. She headlines: “A zombie is gone, but a monster is born.” Is there a risk that the new mega-bank will now become even more “too big to fail”?
“The risk is there,” says Manuel Ammann, Professor of Finance at the University of St. Gallen: “We’re not talking about any small company here, but about huge, highly complex banks.”
You definitely can’t leave this colossus like this.
Caution is also required for Hens. “When you have such a large company, who wants to save it in the end?” asks the financial economist rhetorically. And gives the answer himself: “Then there can only be nationalization. There is no other bank that could accommodate such a colossus.”
“Shrinking” UBS again?
The economic and therefore political influence of the future banking giant is likely to be considerable. That’s why Hens pleads for moderation after the fire brigade exercise to stabilize the financial center: “It might be sensible to sell one or the other thing that UBS is now taking up over time.”
The Competition Commission can also exert influence here and initiate any resale of parts of the company. “You definitely can’t leave this colossus like this.”
In principle, economist Hens considers the mega-merger to be a logical step. Whining about missed opportunities and mistakes in the past doesn’t help. “Given the mess you’re in now, it’s the best solution.”
Klaus Wellershoff, honorary professor of economics at the University of St. Gallen, seconded: The merger of the two big banks was the right decision on Sunday afternoon – and probably the only one still possible.
The UBS entity will not disappear into thin air once the current financial crisis is over.
“It wasn’t just a forced marriage between the two big banks, it was also quite a hassle for the state government, the financial market regulator and the Swiss National Bank,” says Wellershoff, who was chief economist at UBS until 2009.
According to Wellershoff, the division of the system-relevant CS was probably not feasible in the short time available. “Whether it’s not only a good solution as an emergency plan, but also in the long term – I heard far too little about that at the media conference on Sunday. Because the UBS entity will not disappear into thin air once the current financial crisis is over.”
Now there is an even bigger bank than before, operating virtually globally with the guarantee of the Swiss taxpayer.
After the 2008 financial crisis, politicians tried to solve the too-big-to-fail problem. The plan in the event of a crisis: split off the healthy parts of a bank and wind up the bad parts. “You couldn’t apply that now,” says finance professor Ammann.
“Now there is an even bigger bank than before, which operates virtually globally with the guarantee of the Swiss taxpayer.” For Ammann, the question of banking regulation is “new and acute again” on the table: “You will have to go over the books again.”
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KEYSTONE/Michael Buholzer
The major bank Credit Suisse is taken over by UBS. The newest You can find developments relating to CS and the current banking crisis in Switzerland, reactions and assessments here.