UBS chief executive Sergio Ermotti gave the clearest indication yet that his bank intends to keep Credit Suisse’s domestic business despite fierce opposition within the country.
Speaking at a company-wide meeting this week, Ermoti told Credit Suisse employees that keeping the Swiss bank and merging it with UBS’s domestic business remains a “base case scenario,” according to people who were in attendance.
He added, “I don’t think there is any meaningful value (from a subsidiary) for customers because the combined organization can already meet all their needs.”
The fate of Credit Suisse’s domestic business has emerged as one of the most contentious elements of UBS’ takeover of its doomed rival, which was completed this week.
The gun-to-bank marriage has drawn criticism within Switzerland. An opinion poll published shortly after the deal showed that three-quarters of voters wanted to break up the huge bank.
A month later, Swiss parliamentarians voted against the government’s CHF109 billion fiscal package backing the deal in a symbolic protest.
A potential merger between the local businesses of UBS and Credit Suisse has become a thorny issue ahead of the Swiss national elections in October, with politicians warning of possible branch closures and job cuts.
The joint business between UBS and Credit Suisse of Switzerland will account for 29 percent of domestic deposits — the same as the total of the 24 government-owned cantonal banks. It will also own 31 percent of corporate loans, just below the 34 percent of cantonal banks.
When it comes to mortgages, UBS-Credit Suisse will account for 26 percent of households and 20 percent of local loans to businesses, compared to 38 percent and 49 percent, respectively, for cantonal banks.
Due to the complexity of the Credit Suisse acquisition, UBS has postponed its second-quarter results from July 25 to August 31, when it is expected to announce its final decision on the future of the Swiss business.
Irmotti was asked during the city council on Thursday why the decision on Credit Suisse’s local bank took so long.
He said the three main considerations for deciding whether to divide the business are whether it will benefit customers, create value for UBS shareholders or provide jobs.
He added that UBS had no intention of operating both banks as separate brands under the same corporate umbrella. He said, “This is unimaginable, let’s be very clear.”