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Activist investor renews call for merger of UBS and Credit Suisse

Mounting a stronger criticism against Swiss bank UBS, activist investor Eric Knight said the bank should step up restructuring efforts by considering merger of its investment banking arm with Credit Suisse.


As cited in Reuters, Knight said the deal has the potential to create a top player and will enable UBS Group to focus on its wealth and asset management businesses.

Knight has been clamouring for a change at the UBS for the past two years and had put forward the proposal last month about the need for the bank to shrink substantially and look at spinning or merging its investment banking unit.

In two letters sent to the bank in April last year, Knight said that the rest of the bank is providing the investment bank with a funding subsidy.

"This leads us to the conclusion that UBS needs to be radically streamlined, just as many of its global universal banking peers are doing – with a new strategy and possibly under new management – or absorbed into an organization that is better able to take on this task."

Swizz paper Sonntagszeitung quoted Knight as saying: "Such a combination could be an interesting way to reach critical mass and the shareholders of both groups could profit from large synergy effects.

"The fusion would create a top player. But there are other possible partners, for instance Deutsche Bank."

The bank is slated to hold its shareholder meeting on May 7.

Image: Knight Vinke has been urging UBS to spin off its investment bank as it is unviable. Photo: courtesy of OettingerCroat.