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Would Julius Baer entertain another merger? The bank was quite recently speaking to both EFG International and Notenstein La Roche, finews.com has reported previously (see stories here and here). Both sets of talks ultimately fizzled.

Tap Shareholders?

To be sure, Credit Suisse is miles bigger, but CEO Tidjane Thiam and his colleagues would be foolhardy not to be discussing it. At the beginning of his tenure, Thiam said he would like a piece of the Swiss consolidation play.

Why? Credit Suisse desperately needs to grow, and while Iqbal Khan’s private bankers have posted healthy inflows in recent quarters, Julius Baer’s assets would vault the bank up a league. In Asia, Thiam’s preferred growth market, Credit Suisse would be within striking distance of UBS with Julius Baer’s assets.

To be sure, a merger of the two is riddled with complexity: Julius Baer's rich valuation serves as a protective shield. Credit Suisse simply doesn’t have the 14 billion francs in cash or stock handy, and Thiam would have to tap shareholders for a third time. The jury is out on whether he has the credibility and support to – successfully – do so.

Ballsy Play vs Safe Harbor

Culture is another sticking point: Credit Suisse drew a painful lesson when it suffered massive client withdrawals after integrating Clariden Leu, a bank it had managed at arm's length for several years. Many of Julius Baer's influential private bankers are the same type as Clariden Leu: they never want to see the inside of a big bank again.

The logistics also aren’t simple: both Credit Suisse and Julius Baer are grappling with IT renewal problems which will cost hundreds of millions. Credit Suisse split up its private bank into the Khan-led international unit, an Asian business, and a Swiss one led by Thomas Gottstein.

Strategically, the case for Credit Suisse making a play for Julius Baer is obvious, several investment bankers say. Whether Thiam makes a ballsy move is of course uncertain. By contrast, Sauter presumably wouldn't be a hard sell to lead his vulnerable private bank into safe harbor.