The Swiss Bank Corporation and the Anglo-American road

Derivatives and O’Connor

The Swiss Bank Corporation chose a different path to the same destination. According to the Historical Dictionary, the real-estate crisis and the deregulation of the Swiss banking sector at the beginning of the 1990s forced the big banks to reorient their strategies. The Bankverein’s answer was to buy specialised firms in the United States and the United Kingdom and to build around them an investment bank whose culture would be Anglo-American from the start. Its first step was in derivatives. O’Connor & Associates had been founded in Chicago in 1977 by the mathematician Michael Greenbaum with backing from Edmund and William O’Connor, two brothers who had made a fortune trading grain on the Chicago Board of Trade. A currency joint venture with the Swiss Bank Corporation in 1989 prepared the ground for the outright acquisition of the firm by the Bankverein in 1992. At that time O’Connor was one of the largest options trading firms in the world, with more than 500 employees.¹

The acquisition of O’Connor had consequences that went beyond the options business. The Chicago firm brought with it a quantitative approach to risk, a flat hierarchy and a group of young traders and mathematicians who rose quickly within the Swiss bank. The Historical Dictionary characterises O’Connor as specialised in derivatives and risk management. Several of the people who later led the combined UBS came from this environment or were shaped by it. The integration of O’Connor into the Bankverein was the first instance of a pattern that would recur. A Swiss bank bought a smaller but more sophisticated American firm and then allowed the acquired culture to transform its own. After the merger of 1998 O’Connor continued as a distinct platform within UBS, later as the hedge fund manager UBS O’Connor, until UBS sold the business to Cantor Fitzgerald in a transaction agreed in 2025.²

Brinson Partners

The second step concerned institutional asset management. Gary P. Brinson had built up an investment management business at the First National Bank of Chicago from 1979 and made it independent through a management buyout in 1989. In 1994 the Swiss Bank Corporation agreed to acquire Brinson Partners for USD 750 million, which gave Brinson and his partners a profit of USD 460 million on their 75 per cent stake. After the merger of 1998 Brinson Partners became the core of the group’s asset management business in the United States, and Brinson himself became chief investment officer of UBS Asset Management. The Historical Dictionary mentions the acquisition of an American asset manager in 1994 and of an American investment bank in 1997 without naming them. It adds the sober observation that the Bankverein never really gained a foothold in the United States.³

S.G. Warburg

The third and most spectacular step was the purchase of S.G. Warburg in 1995. Siegmund Warburg’s merchant bank had been one of the leading houses of the City of London since the 1950s and had pioneered the Eurobond market. After the London Big Bang of 1986 it had acquired the stockbrokers Rowe & Pitman and Mullens and the jobbers Akroyd & Smithers to create an integrated investment bank. In 1993–94 it employed 4,472 people and had total assets of GBP 22.58 billion. Late in 1994, however, the firm issued a profit warning, and merger negotiations with Morgan Stanley became public in December and then failed. In the first months of 1995 Warburg withdrew from the Eurobond market, lost key executives in its equity capital markets business and saw its chief executive resign. A second profit warning followed in May 1995. In the same month the Swiss Bank Corporation agreed to acquire the firm for GBP 860 million.⁴

The European Commission cleared the concentration on 28 June 1995. Its decision describes the Swiss Bank Corporation as one of the “big three” Swiss credit institutions and S.G. Warburg as the leading investment bank in the United Kingdom. The Swiss bank’s British subsidiary acquired the investment banking business of Warburg for cash, while the asset management company Mercury Asset Management, in which Warburg held 75 per cent, was excluded from the transaction.⁵ The Historical Dictionary notes that the purchase gave the Bankverein a larger client base in investment banking in Europe and Australia.⁶ The combined business traded as SBC Warburg. For the City the acquisition was a symbol of the end of the independent British merchant bank. For Switzerland it was the moment when a Swiss bank became the owner of one of the most prestigious names in European finance.

Dillon Read

The fourth step completed the Anglo-American construction. In mid-May 1997 the Swiss Bank Corporation agreed to acquire the New York investment bank Dillon, Read & Co. for USD 600 million in shares. Dillon Read was a partnership with a history of 165 years, 52 partners, 715 employees and a capital of USD 200 million. Its strength lay in advice on mergers and acquisitions for clients such as Anheuser-Busch, General Mills and Levi Strauss. The Swiss bank intended to combine it with SBC Warburg under the name SBC Warburg Dillon Read. The chairman and chief executive of SBC Warburg, Hans de Gier, said that the combination would create enormous benefits for clients and shareholders alike.⁷ The deal followed the withdrawal of the Dutch ING Group from negotiations with Dillon Read and took place amid a broader wave of consolidation on Wall Street.

Within five years the Swiss Bank Corporation had thus assembled an investment bank from four acquired firms: a Chicago derivatives house, a Chicago asset manager, a London merchant bank and a New York advisory firm. Behind this strategy stood Marcel Ospel, a Basel banker who had worked for the Bankverein in London and New York and at Merrill Lynch before becoming head of SBC Warburg and, in 1996, chief executive of the whole group.⁸ Ospel and his team were convinced that the Swiss franc balance sheet of a big bank was a strategic asset that could be deployed in global markets. They were also convinced that a bank of the Bankverein’s size could not finance this ambition alone. The idea of a merger with one of the two Zurich banks followed logically from the Anglo-American strategy.

Notes

1. HLS, “Schweizerischer Bankverein (SBV)”, section on the 1990s, https://hls-dhs-dss.ch/de/articles/041896/2012-11-27/; Wikipedia, “O’Connor & Associates”, https://en.wikipedia.org/wiki/O%27Connor_%26_Associates (cited for the founding and ownership history). ↩
2. Wikipedia, “O’Connor & Associates”, as cited above. ↩
3. Wikipedia, “Brinson Partners”, https://en.wikipedia.org/wiki/Brinson_Partners (cited for the transaction terms); HLS, “Schweizerischer Bankverein (SBV)”, as cited above. ↩
4. Encyclopedia.com, “SBC Warburg”, https://www.encyclopedia.com/books/politics-and-business-magazines/sbc-warburg. ↩
5. European Commission, Case IV/M.597 – Swiss Bank Corporation / S.G. Warburg, decision of 28 June 1995, https://ec.europa.eu/competition/mergers/cases/decisions/m597_en.pdf. ↩
6. HLS, “Schweizerischer Bankverein (SBV)”, as cited above. ↩
7. American Banker, “Swiss Bank Corp. to Buy Dillon Read & Co. for $600 Million in Stock”, 16 May 1997, https://www.americanbanker.com/news/swiss-bank-corp-to-buydillon-read-amp-co-for-600-million-in-stock. ↩
8. Plattform J, “Bankwesen”, obituary of Marcel Ospel, 26 April 2020, https://www.plattformj.ch/artikel/181475/, which records his posts in London and New York for the Bankverein, three years at Merrill Lynch and his position as head of the Bankverein’s group executive board from 1996 to 1998; Malay Mail, “Swiss banker Marcel Ospel, who helped create UBS, dies at 70”, 27 April 2020, https://www.malaymail.com/news/money/2020/04/27/swiss-banker-marcel-ospel-who-helped-create-ubs-dies-at-70/1860640, for his terms as UBS chief executive from 1998 to 2001 and as chairman until 2008; Encyclopedia.com, “Ospel, Marcel 1950–”, https://www.encyclopedia.com/economics/news-wires-white-papers-and-books/ospel-marcel-1950, for his birth in Basel and his role in the acquisition of S.G. Warburg. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.