The new challenge in corporate finance: 1+1 < 2
Companies need to redefine their financing strategy
Will Credit Suisse’s Swiss business be merged with UBS or not? The fact is that once the merger has been duly completed, the decision-makers at UBS will be responsible for determining how to proceed with the components of CS. It can be assumed that UBS has been considering a takeover for some time and will have therefore already examined the feasibility of concrete implementation plans. Observers consider the integration of CS (incl. Credit Suisse Switzerland) – with a realization of considerable synergies – to be the most likely option. The reduction of redundant branches, IT structures and personnel offers enormous savings potential (even if this will prove complex to implement). A spin-off of CS Switzerland by means of an IPO or a bundled sale to a competitor are somewhat unlikely options. Against this backdrop, the first steps toward adapting the organizational structure, defining key personnel and a preliminary dual-brand strategy are also more about stabilizing the business and gaining time for a carefully considered approach.
Given this background, companies would do well not to wait until pressure for financing is high or an immediate need has to be met before they react. Extensive measures to combat inflation in industrialized nations, coupled with the associated upheaval on the foreign exchange markets and any ensuing recession, are putting business models to the test. Success factors that enable companies to maintain room for maneuver even in turbulent times are forward-looking planning, structuring of measures and reduction of dependencies. Against this backdrop, it is already imperative for companies to examine their own financing needs, the appropriate instruments and service providers, and alignment with their future business. This process should at the latest be triggered by the foreseeable changes in the Swiss banking market. In order to jointly identify increased risks and potential opportunities, we emphasize personal and open dialog.
- Draw implications and lessons from the dynamics in the banking sector
- Identify dependencies and lead times for adjustments
- Compile a catalog of measures for securing short-term liquidity
- Know existing financing, limits and debt capacity
- Determine future financing needs in line with the business model
To download the IFBC UpDate – Market Report, please click here (publication in German).