Swiss Banks Eager but Focused
A mid crowded market conditions at home, Switzerland's largest banks are expanding in New York, Tokyo and London.
But unwilling to spread themselves too thin, the country's Big Three - Swiss Bank Corp., Credit Suisse, and Union Bank - are concentrating on niches such as as private banking, asset management, and project finance. The Swiss also are keen to build up an international position in investment banking.
"We are concentrating on the more complicated, higher-value-added financial engineering type of projects," said Peter Rogge, senior vice president in charge of corporate development at Basel-based Swiss Bank Corp.
"The major Swiss banks are positioning themselves to become global universal banks on a wholesale basis," says Pierre de Weck, executive vice president for Union Bank of Switzerland in the United States.
Universal banks make loans, underwrite corporate debt, and take positions in corporate securities.
Switzerland's three largest banks have combined assets of $452 billion
In the investment banking arena, only Credit Suisse has a proven record. The bank has a majority stake in Credit Suisse First Boston, an investment bank it holds with New York-based First Boston Corp.
Setbacks for Earnings
But earnings at Credit Suisse plummeted last year after a $587 million loss at CS First Boston. The loss triggered a 78% slump in net group earnings, forcing the bank to raise additional capital.
Swiss Bank Corp. and Union Bank do not break down results by activity. But both are sait to have fared poorly in investment banking in London and New York, where they invested heavily in recent years to build or acquire operations.
To cope with the growing scope and complexity of their operations, Switzerland's big banks are reorganizing internally.
Changes in Organization
Credit Suisse has set up a holding company, while Union Bank has reorganized its worldwide operations into separate divisions according to type of activity.
Going one step further, Union Bank has granted a large measure of autonomy to its overseas managers, breaking the strong hold management has traditionally exercise over operations out of headquarters.
As they advance abroad, meanwhile, the big banks are consolidating at home, hoping to build a strong and dependable source of deposits and retail banking income.
Credit Suisse swallowed Bank Leu, Switzerland's sixth-largest bank, and Swiss Bank Corp. acquired control of Banca della Svizzera Italiana, the country's 11th-biggest bank.
Bankers say more consolidations are coming, possibly even a merger between two of the big three.
"We'll be seeing some more consolidations in the medium term," Mr. Rogge said. But a major merger between the country's big banks "is still far down the line," he added.
Table : Switzerland's Top Five Ranked by assets; dollars in millions Year ending Percent World 12/31/90 12/31/89 change rankUnion Bank of Switzerland $183,443 $140,247 30.8% 23Swiss Bank 151,260 123,539 22.4 27Credit Suisse 117,346 89,116 31.7 39Swiss Volksbank 34,971 24,962 40.1 131Banque Cantonale de Zurich 34,828 25,571 36.2 132