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ECONOMY

UBS merger with Credit Suisse raises job fears in Switzerland

Among the many concerns over the new megabank created by the merger of UBS and the beleagured Credit Suisse is how it will affect jobs and competition in Switzerland's banking sector.

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What are the most in demand jobs right now? Photo by Glenn Carstens-Peters on Unsplash

The Swiss government strongarmed UBS into buying its rival for $3.25 billion after the collapse of three US lenders in March raised concerns about Credit Suisse’s own financial health, following a series of scandals in recent years.

But little has been said about the most robust part of the sprawling bank – its domestic retail banking division, responsible for mortgage loans and financing for Swiss companies.

Credit Suisse’s heavy losses were mostly due to the international wealth management and banking divisions.

The Swiss division’s turnover only fell by five percent last year – whereas turnover in international wealth management slid by nearly a third, and the investment bank tumbled 54 percent.

Investors are becoming impatient with the scattered details around the complex integration.

READ ALSO: Gold, secrecy and wealth: 6 Swiss banking myths that need to be busted

UBS insisted this week that “all options” would be considered for the Swiss activities of the bank, promising to share more details in the coming months.

UBS now ‘too big’

But investors are anxious to know whether UBS will integrate the Swiss banking division into its own domestic business, sell it, or even split it through a share offering.

“One of the reasons that supports the idea of a spin-off is probably the fact that UBS has gotten too big after swallowing Credit Suisse for the Swiss market,” said Ipek Ozkardeskaya of Swissquote.

“Another could be to maximize the Swiss branch potential and to offer Swiss clients an alternative to UBS.”

Keeping it as an independent unit appeals to many in Switzerland – particularly as it could prevent mass layoffs in the important banking sector.

Together, the two banks employ 120,000 people worldwide, including 37,000 in Switzerland.

“Full integration means that UBS would have to take a lot of costs and fire a lot of people at Credit Suisse,” said Andreas Venditti, analyst at asset manager Vontobel.

Credit Suisse itself had considered a partial IPO of its Swiss branch in
2016.

“We are still in favour of splitting off the Swiss branch,” the Foundation Ethos, which represents pension funds in Switzerland, told AFP.

Ethos said this was the best option not only to protect jobs, but to avoid concentrating risks in one giant bank.

Venditti says that UBS could “carve out Credit Suisse Switzerland’s front office only… (the brand) would survive and the two banks would compete.”

“If in a few years’ time the situation has stabilised then it would be a good time to bring this new smaller Credit Suisse to the market,” he said.

J.P. Morgan analysts said splitting it off as an independent arm could create a division valued at a minimum of $10 billion for UBS.

“We know that a spin-off could unlock value,” said Ozkardeskaya.

And it could also help calm jittering investors about the threat of “a giant that became even more giant after the merger”, she said.

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ECONOMY

Why is Switzerland Europe’s ‘most competitive’ country?

Not only is Switzerland the most competitive in Europe, but it is also in the second place worldwide.

Why is Switzerland Europe's 'most competitive' country?

In its new annual ranking, the IMD Business Institute named Switzerland the world’s second-best in terms of competitiveness. 

Singapore is in the first  place, which means Switzerland is in the top spot among European nations.

What does ‘competitiveness’ mean?

For the purpose of this survey, among the most reputable globally, IMD ranked 67 countries.

It examined and compared each nation’s GDP and productivity, along with political, social and cultural factors.

“Governments play a crucial role too, by providing an environment characterized by efficient infrastructure, institutions, and policies,” IMD said.

In what areas is Switzerland particularly competitive?

It is in the first place in terms of government efficiency — the position it has held since 2022.

Within this particular category, the country excels in public finance and institutional organisation.

It is also at the top for its infrastructure, particularly for health services, environment, as well as educational system.

In this category too, the country has maintained its first place for several years.

Switzerland also scores relatively high (second place) for productuvity and efficiency, as well as infrastructure for scientific research.

Where does Switzerland rank less well?

It is in the 16th place for international trade, in the 15th for ‘attitudes and values’.

And it should come as no surprise to anyone living here that the country ranks in the 61st place (that is, near the bottom), in terms of prices.
 

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