Analysis of the Swiss bank acquisition: A colossal entity with weaknesses

UBS is supposed to save Credit Suisse and thus the Swiss financial center. The fact that a much larger bank is now being created harbors new risks. Nationalization would have been better.

The good news first: The probability of another financial crisis has decreased – thanks to the courageous intervention in Switzerland, the significant countermeasures taken by the central banks and the lessons learned from the great financial crisis of 2008.

Even bigger, even more dangerous

It was close. In a quick-fix procedure, the major Swiss bank UBS was almost forced to take over its stumbling competition, Credit Suisse, before it fell to the ground, knocking down many other banks with it. Using a crowbar and working roughly with it can lead to success, but it doesn’t have to. Because in the end, subtleties decide about the weal and woe of an operation. Well-being can mean success, that the stock exchanges appreciate the trick with UBS, in other words: don’t tremble any further.

First of all – because the woe can come later. The merger of UBS and Credit Suisse creates a giant of the European and global banking scene. One that is definitely standing on shaky ground – alone with the mortgage that Credit Suisse is bringing into the new bank, and which will be much larger. Even bigger, even more dangerous – and even more dependent on being rescued in the event of an emergency. With far more effort and even more money.

Markus Gürne, HR,’s opinion on the Credit Suisse takeover

tagesschau24 09:00 a.m., 21.3.2023

The state has the better credit rating

The better news about UBS’s takeover of Credit Suisse would have been nationalization. Not because the state is the better entrepreneur. No: Because the state, especially the Swiss, has a much better credit rating, i.e. enjoys trust. However, the state should not send ministers or state secretaries to the bank, but capable managers with a specialist background. This is imperative because competence is at least as important in a rescue as determination. It needs it if the new bank works successfully – and earns money. Then it belongs back on the stock exchange,

However, Switzerland has opted for a major merger of UBS and Credit Suisse. Let’s hope that there won’t be another opportunity to have to nationalize the next rescue.