Market Analysis

UBS's acquisition of Credit Suisse has raised concerns about the potential impact on Swiss companies due to the newly enlarged bank's significant market influence. This 2023 merger created a bank with a balance sheet twice the size of Switzerland's economy, effectively eliminating one of the country's major banking players.

The merger has narrowed financing options for Switzerland's high-cost export-oriented companies, historically supported by Credit Swiss in areas like export finance. UBS CEO Sergio Ermotti has emphasized robust market competition, stating UBS would still rank second after cantonal lenders in most product areas.

However, Ermotti highlighted issues with Credit Suisse's business model, suggesting necessary adjustments in pricing to address unsustainable costs and risks. Experts anticipate UBS may raise prices as it renegotiates new loans, although concrete evidence of increased costs remains limited for now.

Swissmem, representing industry leaders such as ABB and Siemens, reported concerns among firms about deteriorating banking services, particularly in credit availability. Regulatory scrutiny of UBS's market dominance continues, with concerns over potential antitrust implications and impacts on competition in sectors like bond underwriting and non-mortgage loans.

Executives from Swiss-listed firms fear rising costs for corporate bonds and a less competitive lending environment. Smaller firms, in particular, may face challenges accessing affordable financing, caught between limited options from cantonal banks and fewer alternatives left by the merger.

While UBS's market position remains formidable, concerns persist about potential price hikes and reduced competition in Switzerland's financial sector.

Paraphrasing text from "Reuters" all rights reserved by the original author.