Swissmem companies criticize poorer conditions at UBS

In the machine industry, margins are tight, competition is tough, and times are stormy. Sometimes business is booming, sometimes it’s slow. Then it can be tight to get the wages paid to the hundred employees on the 25th of the month. For the CEO of a company in western Switzerland, this is business as usual. It was also the case for his long-standing bank, Credit Suisse. But since UBS took over, everything has changed.

“The people in the local branch no longer have any say. The Zurich headquarters decides,” says the company’s CEO. And the company gave the thumbs down when 150,000 francs were missing in August to transfer the wages on time. Bridging the gap – out of the question. The guarantee of a payment of 3 million francs four days later did not change that. The bank told the company that the wages should just be paid later.

“That would have been a catastrophe, panic would have broken out,” says the CEO. He put the money in himself. He has since got it back, but trust in UBS is gone: “Such situations are normal in our industry. UBS’s behavior was simply ridiculous.”

Swissmem President: “We are disappointed with UBS”

The near-grounding of the machine manufacturer is symptomatic of the alienation between the major bank and the Swiss manufacturing base. Following the merger, the Swissmem industry association demonstratively backed the new UBS. Swiss industry needs a major bank that operates internationally, said Swissmem President Martin Hirzel in a conversation with the UBS CEO. “I am very grateful for Sergio Ermotti’s promise to the Swiss manufacturing base and SMEs,” said Hirzel at the end of last year.

Gratitude has given way to disillusionment. The reason is a new survey by Swissmem. In August, the association asked its members how satisfied they were with the new UBS. The result was not very flattering for the bank: 23 percent said that the conditions or the quality of UBS’s services had deteriorated since the CS takeover.

“We are disappointed with UBS,” says Swissmem President Hirzel. “They always assured us that they recognized the importance of the tech industry and wanted to be a reliable partner. The large number of companies affected now paints a different picture.”

The proportion of companies affected has more than doubled

Since the first Swissmem survey a year ago, the proportion of companies affected by a deterioration has more than doubled. “We fear that this trend will continue, because many companies still have to renegotiate loans,” says Hirzel.

For around half of the companies affected, the deterioration occurred during renegotiations after a contract expired. In 15 percent of cases, UBS enforced adjustments even though the contract was still valid. By far the most common cases are mortgages and business loans. But companies also report worse conditions in export financing, payment transactions and capital market transactions.

The numbers are only part of the picture. Although the survey was conducted anonymously, companies were given a space to comment. They made extensive use of this: “The companies clearly expressed their disappointment with UBS,” says Hirzel. “In some cases, this even turns into anger and resentment.”

CS lured customers with dumping offers

The results caught UBS off guard. On Wednesday, at an investor conference, the bank emphasized how good its relationship with corporate clients was. A manager said that it had no problems with 99 percent of them. “We don’t see any noise from our clients.”

Now the bank has to re-orientate the microphones. “We take every piece of feedback very seriously, Swissmem is an important partner for UBS,” says a UBS spokeswoman. The corporate client business is of central importance to the bank. UBS has not increased its profit margin. “The adjustment of the credit conditions reflects the massive changes in the economic environment,” says the spokeswoman, referring to the drastic increase in interest rates and the shortage of money supply since March 2022.

UBS circles also stress that in its final phase, CS tried to keep customers on board with dumping prices. In the case of loans where the price does not cover the costs, the bank seeks dialogue with customers, says the spokeswoman. “We are looking for the best solution for both sides.”

According to the survey, this is only successful in isolated cases. In 14 percent of cases, the conversation with the bank was successful from the customers’ perspective. More than a third reported that negotiations with UBS were unsuccessful, but that switching to another bank was not an option. A good quarter reduced their business relationship with UBS.

UBS has a dominant position in the market

According to observers, the market plays a role in mortgage loans. Other banks offer more attractive conditions. However, switching is more difficult when it comes to complex corporate loans and capital market transactions. The frequently mentioned foreign banks currently play no role: according to the survey, not a single company has broken off its business relationship with UBS and switched to a foreign bank.

The Competition Commission (Weko) had already concluded in its investigation that UBS had a dominant position in certain sectors due to the CS takeover. In the corporate customer business, it has a market share of almost 40 percent, and in certain areas it has a “quasi-unique position”, according to Weko. Customers have no full alternatives to UBS, which gives the bank room to expand its margins, wrote the competition watchdogs.

The Swissmem survey confirms this finding. “In the medium to long term, competition will play a role as other players enter the market or expand their offerings,” says Swissmem President Hirzel. However, the companies affected already need competitive conditions today. “Swiss industry has done its homework, but due to the economic situation it is currently going through a dip. If the financing conditions now change, this is anything but beneficial.”

Price watchdog investigates suspected abuse

Price watchdog Stefan Meierhans has also become active. He has received a double-digit number of complaints from UBS customers criticizing an increase in margins on loan interest rates. “We have sent UBS an initial questionnaire to observe whether and, if so, in which areas, price abuse cannot be ruled out,” says Meierhans. Affected companies can also send him reports anonymously.

The head of the western Swiss company has been looking for an alternative – without success. “The local cantonal bank and Postfinance do not offer what we need, and we are too small for foreign banks.” For the time being, he must stay with UBS – and in an emergency, inject his own money again.