As Credit Suisse fades into obscurity after its takeover by UBS last year, international banks are expanding in Switzerland to take advantage of companies’ desire to expand their activities.
French bank BNP Paribas, Deutsche Bank and U.S. lenders Citi and Bank of America are among those increasing their workforce and courting the small businesses that form the bedrock of the Swiss economy.
“When a player is absorbed, musical chairs are rearranged and that creates opportunities,” said Enna Pariset, who heads BNP’s Swiss operations. “Sometimes you get lucky.
Yet it is far from clear that their gradual expansion can seriously challenge UBS, whose market power already makes some companies uncomfortable and has raised concerns at Switzerland’s competition watchdog , COMCO.
Credit Suisse, which collapsed after a series of scandals, was long seen by Swiss industry as the natural partner for business in a banking landscape it dominated alongside UBS.
“Soon after the collapse of Credit Suisse, companies immediately started discussions with foreign banks like ours,” said Jürg Hobi, head of the Swiss branch of Citi’s commercial bank.
Citi, which in September 2022 began serving smaller local companies with international business, has benefited from concerns about overreliance on a single bank and credit crunch, Mr. Hobi said .
Today, Citi employs eight people in the Swiss commercial bank and aims to double this figure by 2028.
Nicola Tettamanti, president of Swissmechanic, which represents small and medium-sized industrial companies in Switzerland, welcomed the measures taken by foreign banks, although he said the benefits could take some time to trickle down.
“As a supporter of competition, I am completely comfortable with more players entering the market, which will improve services and prices,” he said. he declared to the Reuters agency.
“I think they will focus on the big companies first, but the small companies will eventually see the benefits once the banks expand their activities,” added Tettamanti, who also wants Swiss banks to are doing well abroad.
COMPETITION FEARS
At Deutsche Bank, 50 people work in its Swiss corporate banking arm, 10% more than at the start of 2023, said Véronique Voser, head of the unit for Germany, Switzerland and Austria.
The fall of Credit Suisse helped convince the German bank to expand in Switzerland and take on companies with annual sales of at least 500 million Swiss francs ($560 million), a- she declared.
“We managed to both win new business and increase our business volumes with existing customers,” Ms. Voser said, pointing to double-digit revenue growth in 2022 and 2023.
But UBS, which is by far the largest bank in Switzerland, towers above them all.
The choice for retail banking customers, for the wealthy and for large companies like Nestlé, Roche and Novartis may still be wide – but smaller companies feel less comfortable.
“When it comes to loan financing, I have seen cases where competitors have increased their prices and clients have asked us to step in as an alternative,” said BNP’s Mr. Pariset.
Last week, FINMA, the Swiss financial regulator, said the takeover of UBS and Credit Suisse had not created competition concerns, despite concerns expressed by COMCO, the antitrust authority.
COMCO said the transaction merited further scrutiny and that there were no “full-fledged alternatives” to UBS in the merchant banking sector, calling on authorities to encourage “effective competition “.
Asked about the competitive landscape, a UBS spokesperson pointed to the bank’s previous statements in which it, among other things, rejected criticism about its size.
The head of UBS in Switzerland, Sabine Keller-Busse, told the Neue Zuercher Zeitung newspaper this month that rival banks were seeking to take over her clients since the collapse of Credit Suisse.
Brooke Wachtel, head of corporate banking at Bank of America in Switzerland, said the window of opportunity is closing. “Businesses are looking for new banking partners and are expected to fill this gap in the next 12 to 18 months,” she said.
Mainly serving companies with turnover of more than 200 million francs, BNP has risen to second place in the Swiss franc-denominated bond market and wants to move into share buybacks, said the national director, Mr. Pariset.
BNP saw opportunities among smaller exporters, Ms. Pariset added, noting that it has hired some 50 people in corporate and investment banking since 2022 – including a dozen from Credit Suisse.
($1 = 0.8935 Swiss franc) (Reporting by Oliver Hirt and Noele Illien; Additional reporting by John Revill; Writing by Dave Graham and Mark Potter)
