European Merger Frenzy: And What About Asia?

European Merger Frenzy: And What About Asia?

Swiss Banks Are Watching Events Unfold

And where are the global players from Switzerland in this renewed frenzy? Much like their Chinese brethren, UBS and Credit Suisse seem to be standing on the sidelines as events unfold. The question is whether this is a good thing or not.

UBS probably has more than enough cash to take part in banking consolidation and rumors had it that the bank was eyeing up Commerzbank, with the corporate business of particular interest as it would help UBS attract rich German businessmen for its wealth management.

However, in recent years, UBS has been doing smaller deals instead. In 2017, Switzerland’s largest bank bought the Luxembourg-based private banking division of Nordea. It also added businesses in Sao Paulo and Italy to strengthen the wealth management unit.

A Different Strategy

The same may be true for smaller rival Credit Suisse, which also focuses on the business with rich clients. Upon taking over three years ago, CEO Tidjane Thiam said he would also be inclined to buy but more specifically focus on the Swiss private banking industry.

So far a no show though. Credit Suisse didn’t follow up on its pledge and gave the few opportunities a pass – most recently Notenstein La Roche, the Raiffeisen unit. Compared with the archrival UBS, the Swiss No. 2 probably lacks the financial firepower for a bigger deal.

The current reluctance of the Swiss to get involved in the mergers-and-acquisition frenzy probably also is a result of their strategic preferences. UBS and Credit Suisse focus on wealth management. Buying big inevitably entails adjusting your focus, which they won’t be keen on.

Risky Business

Remaining an onlooker may also have its advantages. Once a bank starts looking into the nitty-gritty of a merger or acquisition, it needs to spend considerable managerial firepower on this one issue and once a deal is being concluded, this is even more so the case.