Swiss banks seen seeing UBS takeover bid

Swiss banks seen seeing UBS takeover bid

The takeover talks between the banks of Switzerland and UBS are deemed unthinkable as the pair are so similar, according to several media reports.

The negotiations that would see UBS take over its embattled domestic rival are being orchestrated by the Swiss regulators in an attempt to reassure the markets before they reopen on Monday. Credit Suisse still looks shaky despite taking a US $54 billion lifeline thrown by the Swiss central bank. After the collapse of two banks in the United States, investors are worried about its future.

US analysts had already suggested 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 in central Zurich, suffered a loss of 7.3 billion Swiss francs US $7.9 billion. Both banks derive most of their revenue from wealth management and investment banking.

UBS generated more than 15 per cent of its US $34.5 billion turnover in 2022 through its global arm, making it the world leader in wealth management.

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

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

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

Some investors think the revamp is too complex and UBS might want to steer clear of taking over Credit Suisse's problematic investment banking.