The management of Swiss banking rivals Credit Suisse and UBS are reportedly weighing a merger of their businesses.
The news has been reported by Swiss finance blog Inside Paradeplatz.
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Details
According to the report, Axel Weber is leading the project nicknamed Signal.
Weber has consulted with Credit Suisse chair Urs Rohner on the project.
The idea has also been conveyed to Swiss finance minister Ueli Maurer and financial watchdog Finma, said the report.
A merger is anticipated early next year, added the report.
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By GlobalDataIf materialised, it would create a banking giant in continental Europe that would compete with other Wall Street giants.
According to the report, Weber would chair the amalgamated entity while the CEO will be from Credit Suisse.
The spokesperson of both UBS and Credit Suisse refused to comment on the matter.
Jobs at risk
The merger is believed to cut down nearly 15,000 of staff headcount, equivalent to 10-20% of the total workforce.
Credit Suisse and UBS have employee strength of around 50,000 and 70,000 globally, respectively.
Collectively, the two banks have nearly 35,000 in Switzerland, of which at least 5,000 would be reportedly slashed in the first phase.
More redundancies are likely to follow, added the report.
Such a deal could be under strict regulatory scrutiny.
Meanwhile, both UBS and Credit Suisse have made senior management changes this year.
Credit Suisse appointed Thomas Gottstein as the new CEO, replacing Tidjane Thiam.
On the other hand, UBS hired ING chief Ralph Hamers to serve as its new group CEO, replacing Sergio Ermotti.
Other consolidations in Europe
The European banking industry has seen various merger plans recently, amid the negative interest rate environment. The situation has been exacerbated by the Covid-19 crisis.
Last week, media reports revealed merger talks between Spanish lenders CaixaBank and Bankia.
The merger, if materialised, will create the biggest domestic bank in Spain with €650bn ($768.7bn) in total assets.
Meanwhile, merger talks between Deutsche Bank and Commerzbank collapsed last year.
The two banks said that the deal would “not provide sufficient added value.”
Comment
Speaking to PBI, Ray Soudah, chairman and founding partner of MilleniumAssociates AG, said: “The potential merger between UBS and Credit Suisse is a clear signal that both banks are still since many years struggling to grow despite having strong wealth management businesses and large domestic national market shares.
“Perpetual cost cutting has been the name of the game for both since the last financial crisis and is set to increase further with or without a mega merger with such events unlikely to improve the future shareprices except temporarily .The best option would be a merger of operational and technology systems into a separate utility keeping client facing businesses and risk management issues separate.”
