Will the big Swiss banks soon be taken over by foreign competitors? Robert U. Vogler, a historian who worked for UBS for years, has analyzed the current situation and has come to some surprising conclusions.
There have been rumors about a potential takeover of UBS and Credit Suisse by foreign rivals. Are they really being lined up for a takeover?
In 2011, I wrote in a piece for finews.ch (only in German) that they were takeover candidates. That was when UBS was worth 66 billion Swiss francs and Credit Suisse 50 billion. The only thing that has changed in recent years is that the two big Swiss banks have become even much cheaper. UBS today is worth about 52 billion francs.
They’ve become a bargain in other words?
Whether the big two are takeover candidates is a difficult question. Theoretically, it is possible, but what this would mean in reality is a different question altogether. A takeover would lead to major political discussions.
Who could be interested in buying a big Swiss bank – and why?
I imagine both Chinese or U.S. banks might be interested.
«Who would want to buy a bank that is constantly embroiled in legal disputes?»
The wealth management in particular is attractive for a company already active in this business. Wealth management is a relatively stable business and less volatile than investment banking or the business with loans and hence it remains attractive.
What are the reasons that speak against such an acquisition?
At UBS, there are the legacies to consider – for example in France. Who would want to buy a bank that is constantly embroiled in legal disputes and under pressure by the judiciary? You would probably want to wait till the problems have been solved – but evidently, they never are. There’s always a new case coming to light.
If we assume for a moment that a Chinese or a U.S. bank wants to buy UBS or Credit Suisse. How would Switzerland respond?
There would be a huge public outcry and the official position would be one of consternation. I cannot imagine that Switzerland would accept the takeover of one or even both big Swiss banks by a foreign company.
«I don't know what the central bank or the regulator could do about a takeover»
The domestic political pressure would become so strong that the government would be forced to act. One of the consequences of a takeover and the subsequent integration of the bank would, after all, be the relocation of the management abroad. Incidentally, the majority of shareholders of both banks has been foreign for decades.
What would the reaction be? Which authority would have to act?
I don’t know what the central bank or regulator could do about a takeover. We don’t have a law that prevents such takeovers. Only an urgent federal decree would do, as we’ve seen before. The government would have to pass such a decree and subsequently ask parliament for approval. There’s no other way because we adhere to the principles of the free market economy.
In France for instance, there’s a law which prevents the sale of a company abroad on grounds of its strategic importance for the country.
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