UBS considering post-merger sale of Swiss banking unit of Credit Suisse

Swiss banking operation is seen as the jewel in the crown

The two Zurich-based neighbours have for decades gone head-to-head in competition. AFP

UBS is reviewing options for Credit Suisse's Swiss bank, including the possibility of keeping the unit's investment banking operations while selling the rest, according to two sources.

It is studying plans to sell the Swiss banking business of Credit Suisse in an initial public offering after taking over its smaller rival, sources said.

The considerations are at an early stage as UBS is focused on completing the takeover and it may not make a final decision on whether to pursue an IPO for months, another source said.

UBS and Credit Suisse declined to comment.

UBS is racing to complete the state-backed rescue takeover of Credit Suisse that will create a banking giant overseeing more than $5 trillion in total invested assets.

The future of Credit Suisse's business in Switzerland is being closely watched as one of UBS's key strategic decisions. A combination with UBS would create a dominant position in the Swiss loan market, according to analysts at Jefferies. Some politicians are concerned that the merger could lead to reduced competition.

Credit Suisse's Swiss bank is one of the lender's four operating units and is seen as the jewel in the crown. The unit reported pre-tax income of 1.5 billion Swiss francs ($1.7 billion) in 2022.

Stripping out its investment banking operations would reverse a move from just a few months ago. In January, Credit Suisse had moved the business from its broader investment banking division into the Swiss unit, according to Credit Suisse's 2022 annual report.

The two Zurich-based neighbours have for decades competed head-to-head for mergers and share sales across the world. UBS, which has lagged behind Credit Suisse in deal-making and share sale rankings, looks to bolster its investment banking business.

On Wednesday, UBS chief executive Sergio Ermotti said that his bank was working on closing its merger with Credit Suisse by the end of May or early June. Regarding a possible sale, Mr Ermotti has said all options for the Swiss business are on the table.

On Sunday, NZZ am Sonntag newspaper reported that UBS was working towards spinning off Credit Suisse's domestic unit. The Swiss newspaper cited a source as saying that UBS had come around to the idea of a spin-off, which it initially ruled out, because of growing public and political pressure.