Page 2 of 2

The development of their respective share prices is symptomatic for the problem of Swiss banking’s finest: both UBS and Credit Suisse in recent years have turned into also-ran companies – while two decades ago UBS for a while had been Europe’s largest bank.

That’s a problem if you specialize in banking with the very wealthy, the so-called ultra-high net-worth individuals (UHNWI). People in other words who own more than 50 million francs and are institutions in their own right. This clientele wants to do business with huge, truly global firms such as J.P. Morgan Chase, Bank of America, HSBC and Citi – all of them Anglo-Saxon firms.

Neither Truly Big Nor Specialized Enough

The wealthy also seek contact to firms that specialize in specific investment segments including private equity and hedge funds. Here, companies such as KKR, Blackstone and Bridgewater, Renaissance and Man Group are their preferred choice.

In other words, the two big Swiss banks are trapped – they are neither of a global size that could matches the big American firms nor are they specialized in a specific investment segment. Faced with this dilemma, they are forced to bring other qualities to the fore, and they haven’t really succeeded in doing so in recent years.

A Huge Opportunity

The change in CEO is a huge opportunity for the two banks to sharpen their image and – ideally – to find their own way ahead. Credit Suisse is now in a situation in which both investors and clients had long wanted it to be: a Swiss boss (Thomas Gottstein) who will give the domestic business the necessary attention because he has himself been in charge of this unit. As a veteran investment banker, Gottstein also is close to the Swiss corporate world.

Expectations therefore are high that Credit Suisse will become more Swiss again. Such a development may unleash a potential that was revealed when Thiam flirted with the idea of selling a stake in the Swiss business on the stock market. The interest in such an IPO was huge and would have generated an enormous added value.

Asian Imprint

Focusing on Switzerland wouldn’t forcibly imply that Credit Suisse has to turn its back on overseas banking. But it would need to reconsider which markets and segments are attractive. A stronger orientation toward independent regions as is the case with Asia under Helman Sitohang might help Credit Suisse sharpen its profile. Credit Suisse would be a Swiss bank right to the core and could use this as a mark of quality.

Not so UBS. Ralph Hamers, a digital banking expert, will finally help the bank become a tech-platform where the UHNWIs can get the services they need. It may help the bank compensate for its size in a global industry and become an innovation champion.

Leading Global Platform

Unlike at Credit Suisse, the Swiss angle would play a minor role, not least because technology reaches across borders and as the bank years ago changed from its original Union Bank of Switzerland into an acronym without any significance.

To say that Hamers is neither an expert in wealth management with rich clients nor the growth business in Asia falls short. This is not what it is about. His is the momentous task of turning UBS into a leading global digital platform. Know-how in Asia and other regions or specific segments he will get from old and new specialists in house.

On this background, the big Swiss banks finally are departing on their separate journeys. And this is a huge asset in itself for Swiss banking that still is home to two major banks. Investors thus get the opportunity to put their money on different business models. Competition is back on for sure.