4. Option: Buying an Asset Manager
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UBS has for quite some time been mulling takeover and merger plans for its global asset management. CS is looking into options for its unit. They both face heavy pressure on margins and the future will be all about scale. Merger mania has taken hold of the industry already.
Insiders have been saying for weeks that UBS and CS were about to become active. The scenario of a merger of the two divisions with a subsequent splitting off seems like an option, with some experts saying that Germany’s DWS will join in to make it three partners.
The strategic value and financial advantages of such a deal would be easy enough to portray, but then putting it in place would appear more complicated. The merger of UBS asset management with DWS had failed two years ago for such reasons of practicability. Even if the two big banks are yet to feel the pinch, putting in place a strategic option of such a deal might be wise, given the reality in this business.
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Probability of takeovers in asset management: 70 percent
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Probability of divestment of CS asset management: 90 percent
5. Option: The Hunt for a Private Bank
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Switzerland is the home of banking and has too many financials based between the two cities of St. Gallen and Geneva. The consolidation that has been on the map for some time has yet to materialize even though the pressure is on.
Why not create a super-private bank? UBS and CS have the means to buy several private banks, for instance, Julius Baer, EFG International, or Banque Privée Edmond de Rothschild. Taking together with their own assets, the volume would be very substantial and the brand names could be used in certain specific areas of the business.
CS had such a group under its roof, with Clariden, Leu, Hofmann, and BGP Banca di Gestione Patrimoniale as well as Credit Suisse Fides – what later became Clariden Leu. The structure wasn’t necessarily the reason why it failed, but rather the bank’s stop-go-strategy.
UBS also had a group of private banks under its fold, with Banco di Lugano, Ehinger & Armand von Ernst, Ferrier Lullin, and asset manager GAM (since sold on the stock market). IT divested the group to Julius Baer in 2005. History may repeat itself, even if the probability may not seem overly elevated.
- Probability at both banks: 55 percent
6. Option: Buying a Foreign Private Bank
There are options abroad too. Institutes that have catered to the needs of the nobles of Europe are aplenty. A takeover would generate synergies and the existing business leveraged abroad. The U.K. would seem ideal given that the private banking business is one of the world’s foremost.
And why not buy into Europe’s largest wealth management market, Germany? CS has more or less waved goodbye to this market a number of years ago, a decision that it could reevaluate. UBS would do well to add some strength in the powerhouse of European business. It has done so before, buying Bank Schroeder, Muenchmeyer, Hengst in 1997.
- Probability: 55 percent
7. Option: Welcome to a World of Tech
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Clinching a deal with a tech heavyweight would signify a real break with the past. Both banks have been very active in seeking co-operations with fintechs. They might consider buying a major digital bank. Or, more daring still, a co-operation with a U.S. tech firm. Such a platform would allow the banks to integrate further providers of services, for instance in the insurance and mortgage business.
Such a model would go far beyond what is on the table today, where Apple and Goldman Sachs have an agreement to issue a joint credit card.
- Probability: 60 percent.
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