Swiss regulator rules out UBS antitrust action over Credit Suisse deal

"The merger of UBS and Credit Suisse will not eliminate effective competition in any market segment," Swiss financial regulator FINMA said in a statement. The Swiss competition authority COMCO disagrees. Keystone / Michael Buholzer

Switzerland's financial regulator on Wednesday ruled that the UBS takeover of Credit Suisse did not create any competition concerns, despite recommendations from the country's antitrust watchdog that it merited further scrutiny.

Debate has been vigorous in Switzerland about the size and power of UBS, which analysts say has a dominant position in areas such as Swiss loan and debt markets since it took over Credit Suisse last year in a state-engineered rescue.

“The merger of UBS and Credit Suisse will not eliminate effective competition in any market segment,” Swiss financial regulator FINMA said in a statement.

The decision follows a more critical report, only made public by the regulator on Wednesday, by Swiss competition authority COMCO. The report was sent in September to FINMA, whose decision has essentially drawn a line under the issue.

FINMA said it will continue to “closely monitor” the UBS-Credit Swiss integration from a supervisory perspective.

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After FINMA’s report, UBS said it will carry on implementing its integration of Credit Suisse. Shares in the bank nudged up after FINMA made its announcement, but later slipped again and were trading slightly down by around 8.30am GMT.

COMCO’s 173-page report concluded by recommending that FINMA not only open a “preliminary review”, but also a more “in-depth” examination of the matter, confirming reporting earlier this year by Reuters that had flagged the watchdog’s concerns.

While saying there was “in principle” competition in retail banking, it noted that customer complaints about pricing had increased and said price developments should be monitored.

COMCO noted the takeover had weakened competition in asset management and that in corporate banking, there are “currently no fully-fledged alternatives” to the enlarged bank.

The watchdog also urged supervisory authorities and legislators to ensure market entry or market expansion is not hindered, saying a “swift granting of authorisation to foreign banks would be beneficial for effective competition.”

COMCO’s role in assessing the impact of mergers was suspended at the time as Swiss authorities used emergency laws to push the deal through. But the agency can still examine UBS’ position in specific markets on competition-related concerns.

UBS, which bought its longtime rival in the biggest banking rescue since the 2008/9 financial crisis, had considered selling Credit Suisse’s domestic business but ultimately opted not to.

The historic takeover eliminated one of the two giants of the Swiss banking landscape, and stirred fears that any problems at UBS could upend the Swiss economy.

It also narrowed the financing options for the country’s high-cost, export-orientated companies, especially with Credit Suisse seen as the bank which supported entrepreneurs.

UBS Chief Executive Sergio Ermotti on Tuesday hit out at calls to set tougher regulations for his bank, saying “fear” and “populist” critics were doing down the business.

“When I look at the discussion after Credit Suisse’s rescue by UBS, I see more fear than courage,” he said in Lucerne.