European bankers have long dreamed of creating a financial giant that could compete with US rivals such as JPMorgan. In her case UBSwho saves her Credit Suisse under a deal brokered by the government, they almost have it. Ironically, the first priority of Sergio Ermotti, chief executive of UBS, is to cut it as quickly as possible. Combining two separate groups into one giant will start its course with a balance of 1.7 trillion. dollars, making it the 10th largest Western bank, according to Refinitiv. According to 2021 data from the Swiss central bank, its domestic market could account for 30% of all deposits, double the share of the next largest bank in the domestic market. Meanwhile, their combined global asset management activity is nearly $3.4 trillion. dollars according to 2022 data, which puts them in second place after the American investment bank Morgan Stanley.

The deal will also, at least initially, place UBS among the investment banking giants as it projects combined advisory and underwriting revenue of $3.2 billion in 2022 figures, surpassing Bank of America and Citigroup. Given this scale, it might be tempting to move up to larger sizes. Of course, I recall that Credit Suisse was in the process of downsizing by selling or downsizing its $68 billion worth of commercial and investment banking business. If UBS had left all this as it is, it could break into the Wall Street oligopoly and reverse a decade of decline in overall market share for European banks. However, the opposite is likely to happen. Sergio Ermotti’s outgoing predecessor, Ralph Hammers, stressed that an expanded UBS would reduce weighted assets related to investment banking to 25% of the bank’s total, down from 29% at the end of 2022. This means UBS could lose at least $26 billion in assets under Sergio Ermotti. Credit Suisse chief executive Ulrich Kerner did not have the funds needed to restructure the bank through downsizing. But UBS, which posted a $9.6 billion profit last year, has the potential to go ahead with the plan.