Underlying the creation of this new Swiss banking behemoth is the perceived need to respond to and prepare for greater European union. The single currency ought to create a much more competitive and transparent European market in capital and financial services. This in turn creates further pressure for cost cutting and mergers, both domestic and cross border.
There is a certain irony in the fact that Switzerland is not part of the European Union, nor does it have any intention of joining the single currency. None the less, both banks have extensive operations throughout Europe, including the City, where they have competing investment banking operations. Both banks also fear they might fall prey to a foreign predator if they don't merge with a more friendly home player.
Exactly the same thought process plagues Martin Taylor and his counterparts elsewhere in the UK banking sector. Barclays and NatWest rank only number 19 and 20 in the world in terms of assets, and individually they will amount to little more than half the size of the unimaginatively renamed United Bank of Switzerland. If commodity banking, like other industries, is going to become dominated in the single market by just three to four big players, then what chance do these two and others have of surviving as independents?
This, however, is where the argument rather runs out of legs, for in truth the Swiss bank merger lends only very superficial support to the case for allowing Barclays and NatWest to merge. For a start, Switzerland is a country of just 8 million people. Its most famous exports are the cuckoo clock and the Swiss army knife. Even its skiing industry isn't much cop these days. When things get tough, it adjusts its workforce by throwing out the immigrants.
Switzerland's success as an economy, and that of her banks, is an international one. In Switzerland, it is genuinely possible to make the argument that the creation of national champions in the international arena should be allowed to override all domestic competition concerns. That's one of the reasons why Switzerland has become home to so many leading multinationals and so much international capital.
The same case cannot be made for Britain, with its much larger and more vibrant domestic market place. Barclays and NatWest already have market shares in small business and credit-card lending which might be considered unhealthy for a large economy of 60 million people. Do we really want to give them even greater power? In recent years, both banks have been poor at product innovation and in customer service. In all yesterday's global banking speak and Swiss cost cutting zeal, there was not a single mention of what this merger might do for the customer. We can expect even less if Barclays were to consummate its desires by merging with NatWest.
The Government should put a stop to the fevered imaginings of our leading bankers by making a clear and unambiguous statement that further large scale domestic consolidation in the banking sector will not be tolerated. If there are any bankers who really believe in the Euro-dimension, they should have the courage of their convictions and attempt a cross-border merger. Now why does that possibility seem just so unlikely?