The case

The Swiss business landscape has been witnessing significant shifts.

Source: Swiss Press (CH Medien / NZZ) & FINMA

The commentary

Bally, a prestigious Swiss luxury brand with a history dating back to 1851, is now under American ownership. Regent, a private equity firm based in Beverly Hills, has acquired Bally. This takeover marks another chapter in the globalization of Swiss luxury, as traditional Swiss companies have increasingly come under foreign ownership. Regent is expected to leverage Bally‘s heritage to further expand its global reach, possibly integrating it with other luxury assets within its portfolio.

In a move that has sent shockwaves through the Swiss SME sector, UBS has introduced substantial risk premiums on loans for small and medium-sized enterprises (SMEs). UBS justifies these increases by pointing to a more pessimistic outlook for the industrial sector, particularly for SMEs. This change significantly raises the cost of borrowing for these businesses, potentially squeezing their profitability and investment capacity. The structure of corporate loans typically includes a reference interest rate, a risk premium based on the company’s creditworthiness, and the bank’s margin. The recent adjustments by UBS mean that SMEs may face risk premiums and margins ranging from 0.8% to 2%, a significant burden for many smaller companies.

FINMA’s Role in the UBS-Credit Suisse Merger: Another crucial element in the Swiss financial landscape is the regulatory approval of the UBS and Credit Suisse merger. The Swiss Financial Market Supervisory Authority (FINMA) completed its antitrust review on 19 June 2024 and concluded that the merger does not stifle competition in any market segment. This decision underscores the unique role of FINMA in Swiss banking mergers, where it replaces State Secretariat for Economic Affairs (SECO) in the oversight process. The approval, without any conditions or requirements, suggests that FINMA views the merger as necessary for maintaining stability in the Swiss financial system, despite concerns about market concentration.

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