Swiss super-bank merger sparks questions

ZURICH: The arranged marriage of UBS and Credit Suisse will create the biggest bank Switzerland has ever seen, with some wondering if the superbank might be too big for its own good.

The deal that was struck late Sunday on Mar 19 prevented the collapse of the country's second largest lender by folding it into the largest.

Both firms were already among the 30 around the world that are considered strategic importance to the global banking system and too big to fail, even before last week's dramatic events.

Some business, industry and politics are not convinced that one even bigger bank will turn out for the better.

According to Philippe Cordonier of Swissmem, the national association representing the engineering industry, said Credit Suisse was the bank of the economy and industry.

Credit Suisse offered a wide range of services essential for international transactions, payments abroad, credits, leasing or currency hedging, he told AFP.

Cordonier said that this is where the question of what skills will be kept as the profiles of the two banks are not identical.

Many questions are unanswered so far.

Such a takeover would normally require months of negotiations, but UBS only had a couple of days under some serious arm-twisting by Swiss authorities.

Ralph Hamers, UBS chief executive, admitted at an analysts' conference that he did not have all the details of the takeover.

Switzerland is a confederation of 26 cantons and Cordonier said the alternative could be to turn from the national banks to the cantonal banks.

Many do not have the skills to help companies export to far-off markets, such as Asia, and would have to develop them.

Cordonier said that the other option is to turn to foreign banks, although they wouldn't have in-depth knowledge of the Swiss market.

If there is only one major bank that has the capacity to work abroad, this will restrict the choice of solutions for companies, said the engineer, who is also concerned about the costs if there is less competition. Credit Suisse was closely linked to the country's economic development as it was founded in 1856 by Alfred Escher, the godfather of Swiss railways.

The expansion of the rail network, the construction of the Gotthard tunnel beneath the Alps, and the start-up of Swiss companies that went on to become leaders in their sector were financed by the bank.

Four big Swiss banks were formed twenty-five years ago, according to the Swiss Federation of Companies, which represents small and medium enterprises.