UBS considering mergers to cope with European banking market malaise

But consolidation in Europe has proven challenging, with Deutsche Bank and Commerzbank breaking off talks earlier this year

Sep 5, 2019 @ 8:40 am

By Bloomberg News

UBS Group is considering mergers as well as cooperation with other banks to help cope with Europe's challenging banking market.

"We are looking at those issues about consolidation as one part of the equation," CEO Sergio Ermotti said at a conference in Frankfurt organized by the Handelsblatt newspaper. "We're also looking at how can we cooperate between banks in the front-to-back value chain, in a complementary way."

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European bankers have long said that the number of lenders in the region needs to shrink to make them more profitable, but the lack of a unified European market for financial services has made cross-border deals difficult.

Even national mergers have proven challenging, with Deutsche Bank and Commerzbank breaking off talks earlier this year. The CEOs of those banks, Christian Sewing and Martin Zielke, echoed Mr. Ermotti's comments at the conference Wednesday.

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UBS briefly discussed a merger with Deutsche Bank earlier this year, and the two lenders also considered merging their asset managers, people familiar have said. UBS has also explored options to cut back-office costs by combining such functions with crosstown rival Credit Suisse Group.

"Consolidation is inevitable in Europe. It's a matter of time," Mr. Ermotti said. "But consolidation is not necessarily the only way the banking system can get out of its problems."

[More: UBS loses 248 advisers in the Americas over past year]

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