UBS market strength puts Swiss industry on edge


  • Firms fear more expensive or reduced services following merger
  • UBS has warned of ‘repricing’ to come
  • Availability of credit is biggest concern
  • Swiss pricing watchdog following situation closely

ZURICH, June 12 (Reuters) – UBS’s takeover of Credit Suisse has fed a creeping anxiety that Swiss companies will pay a price for the enlarged bank’s outsize market strength. The historic 2023 deal created a bank with a balance sheet twice the size of the Swiss economy, and at a stroke eliminated one of the two giants of the Swiss banking landscape. It also narrowed the financing options for the country’s high-cost, highly competitive export-orientated companies, especially with Credit Suisse seen as the bank that supported entrepreneurs in areas like export finance.

UBS Chief Executive Sergio Ermotti says market competition is robust, and that his bank would only be the second-largest player after cantonal lenders in most product areas. Still, last month Ermotti said Credit Suisse had run an “unsustainable business model, too much cost, too little revenue, too much risk,” hinting at price increases. “Services and credit were subsidized or priced at an unacceptable level, well below where UBS prices, and well below (where) every competitor prices. So, it’s true that in a selective way, we’re going to have to relook at repricing things,” he said.

The bank pointed to Ermotti’s remarks when asked for comment on this story, but declined to quantify prospective changes. Reuters spoke to over a dozen finance experts and industry executives who expect UBS to raise prices as new loans are negotiated. Meanwhile, almost half the firms recently surveyed by Swissmem, an association representing industry heavyweights including ABB and Siemens, reported services from banks had worsened, or said they feared they would.

“Some companies are seeing a negative effect on banking services. But many fear this is going to happen,” said Jean-Philippe Kohl, deputy director of Swissmem, whose survey showed availability of credit was companies’ biggest worry.

So far evidence of higher costs feeding through is scarce, and analysts said it was still too early to assess how much costs could rise. That would become more apparent in coming months as old loans give way to new agreements, they said. Some said UBS is being careful for now to avoid drawing tougher antitrust regulation. Financial regulator FINMA is still weighing up a hitherto unpublished report by Switzerland’s competition commission (ComCo) into UBS’s market strength.

In the report, ComCo told FINMA it favours a deeper investigation into UBS’s dominance of parts of the market, Reuters reported in February.

Andreas Heinemann, who was ComCo president from 2017 to 2022, said FINMA from the outset ruled out making the takeover subject to certain conditions such as asset disposals, and waved the deal through before ComCo had given its expert opinion. “FINMA gave the impression that this opinion did not carry much weight in its analysis,” he said. FINMA said it could review the competition impact of the takeover, and would comment on the ComCo report in due course.

Some senior executives at Swiss-listed firms privately worry that issuing corporate bonds could get more expensive. “There’s less competition,” one told Reuters.

The enlarged UBS had a 45% market share for underwriting Swiss franc-denominated bonds in 2023, according to figures from finance industry data provider Dealogic.

The two banks also had a 31% share of the Swiss non-mortgage loan market in May 2023, the last available month of data from the Swiss central bank. In some sectors like manufacturing, the proportion was higher (39%).


One senior finance expert, speaking on condition of anonymity, forecast that once regulatory risks eased, UBS could hike financing costs by a high double-digit basis point amount, based on some early data. Fears particularly stalk manufacturing, which contributes 21% of national output with goods including machine tools, medical implants, chocolate and watches.

Train maker Stadler Rail said it has not been approached by UBS for higher interest margins or fees, and believes it will be protected due to its access to over 30 different banks. But it worries smaller firms could feel pain, with UBS expected to adopt a more top-down, risk-averse approach.

“Many companies are too big to be supported by cantonal banks only and yet too small to attract a wide range of larger international banks to fill the gap CS left behind,” Stadler Rail Chief Financial Officer Raphael Widmer told Reuters. “They might end up being caught between a rock and a hard place.”

Swissmechanic, which represents small- and medium-sized firms, said its members have been evaluating their banking relationships. “We need banks that understand the importance of the industrial sector and support us,” said Swissmechanic President Nicola Tettamanti, who has spoken to more than 100 companies in recent weeks. “We don’t want a free lunch.”

Although UBS does not have a monopoly, it does have a very strong position that could mean higher prices, he said. The Swiss pricing watchdog has so far received no formal complaints, but says it is following the situation closely.




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Edmund Shing, PhD

Global Chief Investment Officer
BNP Paribas Wealth Management

Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

Edmund has a PhD in Cognitive and Computing Science from the University of Birmingham in the United Kingdom, and has done advanced studies in Knowledge-Based Systems and in Experimental Psychology.  He is an EFFAS-certified financial analyst. He has also authored the book “The Idle Investor” published by Harriman House in 2015, proposing 3 simple investment strategies that take only a few minutes to execute per month.

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