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UBS considering mergers to cope with banking market malaise

UBS 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,” Chief Executive Officer 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.”

UBS by Bloomberg

European bankers have long been saying 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 Ermotti’s comments at the conference Wednesday.

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.

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