Today’s UBS has its roots in Lichtensteig

Much of what is big today started out small. This also applies to the major Swiss bank UBS.

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The globally active financial institution with the three letters UBS emerged in 1997 from the merger of the Swiss Bank Corporation (SBG) with the Swiss Bank Corporation (SBV). The UBS, on the other hand, was created in 1912 from the merger of Bank Winterthur and Bank Toggenburg.

Need for bank credit

One of the two origins of UBS begins in the second half of the 18th century in the neighboring town of Lichtensteig in Wattwil and is closely linked to the rise of the Toggenburg cotton industry. The mechanical development gave rise to large-scale factories with increasing capital requirements. In addition, the need for bank loans increased as a result of the monetary and trade crisis that began in 1863 with the American Civil War. It was therefore hardly surprising that the call for a Toggenburg bank rang out from trade and industry circles.

Bank founded in Lichtensteig

On April 6, 1863, regional business people founded the Toggenburger Bank in the old “Krone” in Lichtensteig. One of the initiators was Arnold Schweitzer, who later determined the bank’s fortunes as director for 30 years. Before his appointment, he headed the Toggenburg savings bank, a savings bank that was later taken over by the Toggenburger Bank. This subsidiary, which operated under separate accounts, managed the deposits of its savers and issued mortgages.

The takeover of the Toggenburg savings institution in Wattwil by the Toggenburg savings institution in 1891 led to a significant increase in the balance sheet. The Toggenburger Bank as the parent company carried out various banking transactions itself. Current account transactions, lending to trade and industry, have been a mainstay from the start. Due to international relations, the local economy asked for foreign exchange transactions as early as the 19th century. The institute developed into a people’s and commercial bank that was also devoted to agriculture.

Branches opened in Wattwil, Wil and Flawil

After almost 50 years of existence, the Toggenburger Bank in Switzerland belonged to a group of medium-sized banks and enjoyed a high reputation. It was not only active in Toggenburg, but gradually built up a network of branches throughout Eastern Switzerland. In addition to the headquarters in Lichtensteig, branches in Rorschach, St.Gallen, Wattwil, Flawil, Rapperswil and Wil were added.

Merger with Bank Winterthur

Around 1912, a progressive process of bank concentration began in Switzerland. This fact prompted Bank Winterthur to make first attempts to get closer by proposing a merger to Toggenburger Bank. In Lichtensteig, however, such an approach was rejected because the will for independence was simply greater. But within a very short time those responsible changed their mind. On the one hand, they hoped the merger would provide advantages in further share issues and additional liquidity. On the other hand, those responsible at the Toggenburger Bank recognized that the relatively narrow field of activity in Eastern Switzerland and the dependence on the textile industry are problematic. After only six weeks of negotiations, the boards of directors of the two companies agreed on the merger agreement of what would later become the Swiss Bank Corporation. On October 17, 1912, the majority of the shareholders of the two banks in Winterthur and Lichtensteig approved the project.

The bank would hardly have survived alone

One of the most interesting branches of the old bank was the savings and mortgage department. Since the SBG was more of a commercial bank, this part was separated and henceforth independently run as the Toggenburg AG savings institution. Even though this step gave the region a banking institute that was familiar with the local conditions, many Toggenburgers found it difficult to imagine that the old Toggenburg bank would merge into a larger structure.

The question of whether the merger was really necessary was often asked in retrospect in the region. During the later crisis in the embroidery industry, the Schweizerische Bankgesellschaft suffered considerable losses. Due to its size, it was able to bear these setbacks; this would hardly have been possible for the Toggenburger Bank alone. (cal/hs)

Sources: The Toggenburger Bank, 1863–1912, Emil Walder, St. Gallen, 1914 Schweizerische Bankgesellschaft, commemorative publication for the 50th anniversary, 1962

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