They’re not the first to point out concerns surrounding UBS’ takeover of Credit Suisse last year and certainly won’t be the last. OECD says that the takeover now creates “new risks and challenges” for the Swiss economy. Adding that:
“UBS – already a global systemically important bank before the merger – has thus become even larger and according to the ‘too big to fail’ regulations, it must meet even stricter regulatory requirements.”
It raises questions about competition within the banking sector, as UBS now holds a roughly 25% share of domestic deposits and loans. And while the takeover may have helped to safeguard the Swiss financial system at the time, it now presents a whole different headache as the bank itself has assets that dwarfs the economic output of Switzerland itself.
We’ll see how domestic regulators will look to handle this in the months ahead but at least for now, there’s no immediate worry I would say. As for the Swiss economy, OECD sets a forecast that it would grow by 0.9% in 2024 and 1.4% in 2025 – both below the country’s long-term average growth rate of 1.8%.