A market note from Watson AM, Basel
In March 2023 the Swiss government brokered an emergency takeover of Credit Suisse by UBS. Three years on, the integration is largely done, the fight over how much capital UBS must hold runs into 2027, and one practical effect is already clear. Europe has one fewer large balance sheet, and mid-market borrowers have fewer doors to knock on.
The deal, and where it stands in 2026
On 19 March 2023, UBS agreed to buy Credit Suisse for about CHF 3bn in an all-stock deal put together over a weekend by the Swiss authorities and the financial regulator FINMA. The Swiss National Bank supplied emergency liquidity, the government granted UBS a CHF 9bn loss guarantee, and CHF 16bn of Credit Suisse's riskiest bonds were written to zero. It was the first failure of a global systemically important bank since the 2008 crisis.
The mechanics have since been worked through. The acquisition closed in mid-2023, the legal merger of the two banks completed in May 2024, the Swiss operations were folded together later that year, and by 2026 the integration is essentially finished. UBS now sits at the centre of Swiss banking, with the cantonal banks and Raiffeisen as its main domestic competition.
The unfinished part is regulation. Having looked at what a disorderly collapse would have meant, Switzerland has spent two years rebuilding its too-big-to-fail rules around the one big bank left standing. In April 2026 the Federal Council published its final capital ordinance and sent parliament a draft banking-law change that would make UBS hold capital fully against its foreign subsidiaries, up from the previous 60%. Early proposals pointed to roughly USD 42bn of extra core capital. After concessions in April 2026, the figure came down to about USD 20bn. None of it takes effect before 2027, and UBS has pushed back hard, at one point signalling it could move its headquarters out of Switzerland.
One fewer balance sheet, fewer choices for borrowers
For a developer or an operator looking for finance, the practical headline is choice. Switzerland used to have two global banks competing for the same corporate and real-estate business. Now it has one. Analyses at the time of the rescue flagged the obvious consequence: the takeover narrowed the field of lenders, and small and mid-sized companies were the ones who felt it first.
Higher capital requirements tend to make a bank more selective. Capital held against a loan is capital that can't be put to work elsewhere, so a constrained lender lets go of the marginal, the complex and the cross-border deals before anything else. That's exactly where mid-market property sits. A hotel with seasonal cash flow, a scheme that spans two jurisdictions, a borrower whose file takes real work to read.
Where the mid-market went
The capital moved rather than vanished. Across Europe, non-bank lenders have been picking up the lending that banks under the Basel III and IV rules are stepping back from. The room left to fill is large: by one Apollo estimate reported by S&P Global, non-bank lenders account for around 12% of corporate financing in Europe, against roughly 75% in the United States.
Real estate is where this shows up most plainly. As banks concentrate their balance sheets on senior debt for prime assets, private lenders have moved into the mid-market, with industry commentators putting the typical ticket where banks have withdrawn at between EUR 30M and EUR 75M. European real-estate investment volumes were running higher into the end of 2025, around EUR 77bn in the fourth quarter on Savills figures, and private credit was named as one of the drivers of the recovery.
There's a cautionary side to this, and it's worth saying plainly. Some corners of private credit have leaned on leverage and thin paperwork, and a run of defaults in late 2025, First Brands and Tricolor among them, put the whole asset class under a harsher light. Most of those problems turned out to be specific rather than systemic, and European lending has tended to carry stronger covenants and lower default rates than its US equivalent. The lesson for anyone putting money into the space is an old one. The security is what counts.
Why secured lending reads differently now
This is the backdrop a firm like Watson AM was built for. The model is simple to describe. Watson structures secured loans against European real estate using investor and lending-partner capital, with the protection built in before any money moves: a first-rank mortgage registered before disbursement, a personal guarantee where the deal supports it, and on the fund side a bank guarantee. Every loan runs through a nine-step diligence process, with Swiss and local law firms vetting the borrower and the structure, before it ever reaches an investor.
That posture matters more when the banks are pulling back. The borrowers arriving now are often capable sponsors with good assets who've simply run past a bank's timeline, or fallen outside a box that keeps getting narrower. Speed and certainty of close are usually what they're short of, more than the headline rate. It isn't unusual for a borrower to have spent the better part of two years searching for finance before the right structure comes together in a matter of weeks.
For investors, the same shift reframes the question. As more capital crowds into private credit, the gaps between lenders get easier to see, and the ones that hold up are those that can show their security rather than talk about it. The case is made on the collateral. That, in the end, is the whole idea behind the name.
Watson AM works with professional and qualified investors, and with developers and operators across eleven European markets. Investor and borrower material is available on request.
Common questions
What happened in the UBS and Credit Suisse merger?
In March 2023, UBS agreed to acquire Credit Suisse in an emergency deal arranged by the Swiss government and FINMA after confidence in Credit Suisse collapsed. The legal merger of the two banks completed in 2024, and integration is now largely finished.
How does the merger affect lending in Switzerland and Europe?
It left one fewer large bank competing for corporate and real-estate finance. Tighter capital rules expected from 2027 give UBS reason to be more selective, which tends to push complex and mid-market borrowers towards other lenders.
Who is filling the gap left by the banks?
Non-bank and private credit lenders. In European real estate, private lenders have moved into mid-market deals that banks have stepped away from, a shift industry observers tracked through 2025 and into 2026.
How is secured real-estate lending different from the riskier parts of private credit?
Secured lending is backed by registered collateral, such as first-rank mortgages and guarantees, and by documented diligence, rather than by leverage alone. Secured is not the same as guaranteed, but the security is what protects capital if a deal underperforms.
Watson AM, Basel. This article is general market commentary for professional and qualified investors and for real-estate developers. It isn't investment, legal, or tax advice, or an offer of any financial product.
Sources
- Acquisition of Credit Suisse by UBS, Wikipedia.
- Credit Suisse, Wikipedia (on the narrowed choice of lenders for SMEs after the takeover).
- UBS, completion of the merger of UBS AG and Credit Suisse AG, 31 May 2024.
- UBS, statement on regulatory capital announcements by the Swiss government, 22 April 2026.
- UBS, statement on regulatory proposals made by the Swiss government, 6 June 2025 (the early USD 42bn figure).
- swissinfo.ch, UBS set for long-awaited clarity on Switzerland's capital rules, April 2026.
- S&P Global Market Intelligence, private credit outlook in Europe tempered by rising global risks, 2026 (citing Apollo on the 12% versus 75% non-bank lending share).
- GRI Institute, the new paradigm of real estate debt in Europe, December 2025 (mid-market ticket sizes and bank retreat).
- GRI Institute, market radar Europe, the rise of private capital, December 2025 (the EUR 77bn Q4 2025 Savills figure).
- M&G Investments, European leveraged loans outlook 2026, January 2026 (European default rates and the First Brands and Tricolor context).