UBS and Credit Suisse: Similar Swiss banks with differing fortunes

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ZURICH: UBS and Credit Suisse, the two biggest banks in Switzerland, are in takeover talks, according to several media reports – a move long deemed unthinkable as the pair are so similar.

The negotiations, which would see UBS take over its embattled smaller domestic rival, are being orchestrated by the Swiss regulators in an attempt to reassure the markets before they reopen on Monday (Mar 20).

Credit Suisse is still looking shaky despite taking a US$54 billion lifeline thrown by the Swiss central bank. Investors remain nervous about its future following the collapse of two banks in the United States that sparked contagion fears.

During the week, US analysts had already floated the possibility of a takeover by UBS, which made a healthy US$7.6 billion dollars in net profit in 2022.

Rivals Credit Suisse, headquartered no more than 300 metres away in central Zurich, meanwhile suffered a loss of 7.3 billion Swiss francs (US$7.9 billion).

WEALTH MANAGEMENT, INVESTMENT BANKING

Both banks derive most of their revenue from wealth management and investment banking.

UBS is the world leader in wealth management and generated nearly 15 per cent of its US$34.5 billion in turnover in 2022 through this global arm.

At Credit Suisse – level with the United States' Morgan Stanley in second place – wealth management contributed 22 per cent of the 22.4 billion Swiss francs in turnover.

Investment banking represents 25.2 per cent of UBS's turnover, compared to nearly 20.6 per cent at Credit Suisse, with the pair running many similar activities such as mergers and acquisitions advice.

In October, Credit Suisse began a major restructuring project that plans to separate its investment banking from the rest of its activities after a series of scandals.

However, many investors consider the revamp to be too complex – and UBS might want to steer clear of taking over Credit Suisse's problematic investment banking.

RETAIL BANKING IN SWITZERLAND

Both banks are active in asset management and retail banking. UBS relies on a network of nearly 200 branches in Switzerland, compared to 95 for Credit Suisse.

The Swiss domestic branch of Credit Suisse, considered one of its jewels, is particularly active in mortgages and loans to sm...

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