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The Banking Union would finally set the merger mill in motion. The development would also be of critical importance to the big Swiss banks. Gone are the times when UBS and Credit Suisse laid claim to a special global role. The two companies in many ways are part of Europe and on the background of weak profitability and a sagging share price, a merger with another firm is a must.

«Critical mass is central for the banking industry to be credible and competitive – or to keep it that way,» said UBC Chief Executive Ermotti in November at the annual meeting of the Swiss Finance Institute (SFI) in Zurich. It was a question of not being «too big to fail» but more of «too small to survive», he added.

Too Much Conservation

Some approaches have already occurred, for instance when UBS and Deutsche Bank talked about their respective asset management. But so far, no deal has been reached. Other big institutes have also pronounced interest in a merger, for instance, Société Générale, ING, Commerzbank, and Unicredit. But it isn’t just conditions which hamper mergers that gradually are getting inevitable, but, especially in the cases of UBS and Credit Suisse, it is the management that stands in their way.

At both banks, the executive lived through the financial crisis and therefore has a disproportionate aversion to risk. Which makes achieving a merger with another company all the more difficult. Their attitudes are getting in the way of the ambition to merge with another company. The approach of the top managers is one that fosters conservation, both with respect to the banks as well as to themselves, because they will leave within two years.

Bold Transactions

Only new managers, today in their early 40s, who couldn't have been executives during the financial crisis simply due to their age, will be able to go on the offensive and to contribute to a new dynamic in European banking rising stock prices with bold but well thought-through transactions.

In the long run, an economic area with its own currency but without its own big bank is not imaginable.