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Speculation about a merger of UBS and Credit Suisse is returning time and again, despite the convincing arguments that show such a move to be to the detriment of employees, shareholders and clients.

The start to his new job as head of UBS must have come as something of a surprise to Ralph Hamers. He was barely introduced to his new office when several reports appeared in the media suggesting that the two big Swiss banks, Credit Suisse and his UBS, would merge. Unexpected it must have been because he took office in a bid to rid the biggest Swiss bank of its perceived ponderousness, to make it more dynamic and speed up the digital revolution.

The idea of a merger between the two, the source of vast amounts of newspaper speculation, soon came to nothing. In fact, Chairman Axel Weber claimed not to have known about any such plan and suggested the idea should be discarded.

Axel Weber: I Knew Nothing

A project that had wet the appetite of journalists foundered when confronted by a reality check. Not least when put in relation to the interests of the three groups of interest: shareholders, clients, staff. Which goes to explain why the headlines attracted so little attention among managers, as sources at the two banks revealed when contacted by finews.com.

There are three main reasons not often discussed in public that explain why a merger between the two big banks is so unlikely.

1. Approval From Above

A merger between UBS and CS requires approval by regulators in all key markets. Which was the case when UBS was formed from Swiss Bank Corporation and the UBS predecessor in 1998. The two merging companies managed to get all the required support from above within about nine months.

In today's complex and global economy, the undertaking would be much more arduous to complete. More regulators have to be approached, and some wouldn't decide so quickly – just consider the case of the European Union. Experts at the two banks estimate a time frame of at least 18 months for the endeavor.

In that period of time, the two banks are be forced to proceed with their business with the handbrakes applied. Working alongside but still apart, something that helps nobody but their rivals. At least 18 months of uncertainty that would do little to enthuse shareholders, clients and, for sure, employees.

2. Poaching of the Best

With such a lengthy period of uncertainty, staff would get unsettled and tempted to move. At a time when the two banks would do business at less-than-full speed, rivals would likely get active and attempt to hire the staff of the two banks – as was shown in the recent case of Neue Aargauer Bank (NAB).

The top relationship managers of NAB were contacted by no less than six competitors (Aargauer Kantonalbank, Basler Kantonalbank, Valiant, Hypothekarbank Lenzburg, Basellandschaftliche Kantonalbank, Raiffeisen) and offered a guaranteed bonus.

In Asia, the quintessential growth market, UBS and Credit Suisse would face a major fight over talent, with demand for experienced staff particularly acute in Hong Kong and Singapore. The two companies would likely face a tough challenge to keep their best during the 18 months.