By John Revill
ZURICH (Reuters) – UBS’s takeover of Credit score Suisse has fed a creeping nervousness that Swiss corporations pays a value for the enlarged financial institution’s outsize market power.
The historic 2023 deal created a financial institution with a stability sheet twice the scale of the Swiss financial system, and at a stroke eradicated one of many two giants of the Swiss banking panorama.
It additionally narrowed the financing choices for the nation’s high-cost, extremely aggressive export-orientated corporations, particularly with Credit score Suisse seen because the financial institution which supported entrepreneurs in areas like export finance.
UBS Chief Govt Sergio Ermotti says market competitors is strong, and that his financial institution would solely be the second-largest participant after cantonal lenders in most product areas.
Nonetheless, final month Ermotti mentioned Credit score Suisse had run an «unsustainable enterprise mannequin, an excessive amount of value, too little income, an excessive amount of threat,» hinting at value will increase.
«Companies and credit score had been subsidised or priced at an unacceptable degree, effectively under the place UBS costs, and effectively under (the place) each competitor costs. So, it is true that in a selective manner, we’ll need to relook at repricing issues,» he mentioned.
The financial institution pointed to Ermotti’s remarks when requested for touch upon this story, however declined to quantify potential adjustments.
Reuters spoke to over a dozen finance specialists and business executives who anticipate UBS to lift costs as new loans are negotiated.
In the meantime virtually half the companies just lately surveyed by Swissmem, an affiliation representing business heavyweights together with ABB (ST:) and Siemens, reported providers from banks had worsened, or mentioned they feared they might.
«Some corporations are seeing a destructive impact on banking providers. However many worry that is going to occur,» mentioned Jean-Philippe Kohl, deputy director of Swissmem, whose survey confirmed availability of credit score was corporations’ largest fear.
To this point proof of upper prices feeding by way of is scarce, and analysts mentioned it was nonetheless too early to evaluate how a lot prices may rise. That might grow to be extra obvious in coming months as previous loans give approach to new agreements, they mentioned.
Some mentioned UBS is being cautious for now to keep away from drawing more durable antitrust regulation. Monetary regulator FINMA continues to be weighing up a hitherto unpublished report by Switzerland’s competitors fee (ComCo) into UBS’s market power.
Within the report, ComCo advised FINMA it favours a deeper investigation into UBS’s dominance of components of the market, Reuters reported in February.
Andreas Heinemann, who was ComCo president from 2017 to 2022, mentioned FINMA from the outset dominated out making the takeover topic to sure situations equivalent to asset disposals, and waved the deal by way of earlier than ComCo had given its knowledgeable opinion.
«FINMA seemed that this opinion didn’t carry a lot weight in its evaluation,» he mentioned.
FINMA mentioned it may evaluation the competitors influence of the takeover, and would touch upon the ComCo report in the end.
Some senior executives at Swiss-listed companies privately fear that issuing company bonds may get dearer.
«There’s much less competitors,» one advised Reuters.
The enlarged UBS had a forty five% market share for underwriting Swiss franc-denominated bonds in 2023, in response to figures from finance business knowledge supplier Dealogic.
The 2 banks additionally had a 31% share of the Swiss non-mortgage mortgage market in Might 2023, the final obtainable month of knowledge from the Swiss central financial institution. In some sectors like manufacturing, the proportion was larger (39%).
RISK AVERSION
One senior finance knowledgeable, talking on situation of anonymity, forecast that when regulatory dangers eased, UBS may hike financing prices by a excessive double-digit foundation level quantity, primarily based on some early knowledge.
Fears notably stalk manufacturing, which contributes 21% of nationwide output with items together with machine instruments, medical implants, chocolate and watches.
Prepare maker Stadler Rail (SIX:) mentioned it has not been approached by UBS for larger curiosity margins or charges, and believes it is going to be protected because of its entry to over 30 totally different banks.
But it surely worries smaller companies may really feel ache, with UBS anticipated to undertake a extra top-down, threat averse method.
«Many corporations are too massive to be supported by cantonal banks solely and but too small to draw a variety of bigger worldwide banks to fill the hole CS left behind,» Stadler Rail Chief Monetary Officer Raphael Widmer advised Reuters. «They may find yourself being caught between a rock and a tough place.»
Swissmechanic, which represents small- and medium-sized companies, mentioned its members have been evaluating their banking relationships.
«We’d like banks that perceive the significance of the economic sector and assist us,» mentioned Swissmechanic President Nicola Tettamanti, who has spoken to greater than 100 corporations in current weeks. «We do not need a free lunch.»
Though UBS doesn’t have a monopoly, it does have a really sturdy place that might imply larger costs, he mentioned.
The Swiss pricing watchdog has to date acquired no formal complaints, however says it’s following the scenario intently.
