A year and a half after the collapse of Credit Suisse, foreign banks appear to be prepared to put more effort into Swiss corporate banking. Commerzbank, which positions itself as the „house bank for export-oriented companies“ in Germany, has been significantly expanding its headcount.

The bank has rented additional space at its Zurich headquarters building, just a few meters from the UBS HQ, expanding by two-thirds to 2,000 square meters by the beginning of September. The Frankfurt based institution wants to hire an additional 30 bankers over the next two years.

Marc Steinkat, head of Commerzbank Switzerland, already made his ambitions in the Swiss corporate client segment clear in an interview with Börsen-Zeitung in March. „We want a big piece of the cake,“ said Steinkat, noting that following takeover of Credit Suisse by UBS, many Swiss corporates are building new banking relationships.

„The disappearance of Credit Suisse was a terrible mishap for Switzerland – the bank has long been a pillar of the strong Swiss economy,“ said the 56-year-old executive. The changed competitive situation „now represents a huge opportunity“ for Commerzbank.

The bank last made an effort to expand its Swiss corporate banking business in 2014, and built a network of six branches in almost all parts of the country. But the subsequent phase of negative interest rates later took its toll on the institution, and required cost saving measures necessary in Switzerland too. The workforce shrank from 100 to its current 80 people, with more centralisation.

The bank is now enjoying a buoyant business and earnings situation once again. The group's first half results were the best for 15 years. At the end of June, Commerzbank's balance sheet had corporate customer loans amounting to 99 billion euros. After an economic downturn in recent quarters, demand for loans has picked up again.

When asked, Commerzbank said it was „very satisfied“ with its Swiss business in the first half of the year. The company spokeswoman quoted the Swiss boss as saying that the success was based primarily on a significantly increased loan volume, and the bond business.

SME bank lenders are essential for an economy like Switzerland, with its numerous small and medium-sized, often internationally oriented production and trading companies. Experienced corporate credit specialists estimate the size of this market, excluding small and micro businesses, to be around 20,000 firms.

In previous years, the segment was primarily served by Credit Suisse, UBS, Zürcher Kantonalbank and Banque Cantonale Vaudoise. Credit Suisse played an important role. Past annual reports suggest that Credit Suisse provided domestic industrial companies with around three times as many unsecured loans as UBS, which has a larger balance sheet. The stock of unsecured loans is a reliable indicator of the risk appetite of an SME lender. Against this background, the entry of foreign banks into the Swiss corporate segment is a welcome development.

According to recent figures, Commerzbank had outstanding loan commitments to Swiss corporate customers amounting to 11 billion Swiss francs. By comparison, according to Swiss National Bank statistics, the total number of loans not backed by mortgages to companies in Switzerland with over 50 employees amounts to around 60 billion Swiss francs.

The potential for further growth of foreign credit institutions is therefore present. Although some international banks have in recent months announced their ambitions to target Swiss corporate clients, their generally modest recruitment efforts would seem to indicate that these banks are primarily targeting the 100 to 150 largest listed Swiss corporates, and not the broader market. But providing SMEs with a sufficient supply of well priced loans is crucial for the long-term success of the Swiss economy.