The mood in the stock markets is good. Too good? According to David Benamou of Axiom Alternative Investments, at least some skepticism is warranted. His opinion is also clear regarding the merger of Credit Suisse and UBS.

Mr Benamou, how is business going?

Good. We are experiencing exciting times.

To what extent?

We have turned the page of the low to negative interest rates chapter. That might remain the case for a while. This changes the business outlook for many sectors, especially for European Banks. The next three to five years are likely to be interesting.

Why is that?

The higher the expectations, the bigger the disappointment when things turn out differently than expected. We don't know what the Fed will decide. Perhaps the US central bank considers that we can live with higher interest rates for a longer.

«The US debt is considerable and proves to be more and more difficult to manage»

What do you expect from the US elections this autumn?

That Donald Trump is very likely to win. That should make markets happy again, because of a more favourable fiscal policy and a strong pressure on the Fed for interest rate cut. But apart from that, it doesn't look very rosy. The US debt is considerable and proves to be more and more difficult to manage.

The development as regards ESG is definitely a disappointment.

That's right, and let me share an anecdote with you. Climate transition is a real concern for us as specialists of European Banks, so we wanted to set up a corresponding fund focused on how European banks, who finance 70% of the economy in Europe, help the climate transition.

«UBS is no longer a Swiss bank»

We worked hard on it for a good 18 months and then presented our results to countless investors. Everyone was impressed, but hardly anyone wanted to get on board. I hope we were simply too early to the market (laughs).

What is the reason for this?

There are too many competing approaches, green labels and sometimes different legislations in Europewhen it comes to sustainability. This inevitably led to confusion and disappointment.

In Switzerland, the takeover of Credit Suisse (CS) by UBS, orchestrated by the federal government and the supervisory authority, is creating a new big bank. Many people are very sceptical. Are you sceptical too?

The integration of CS will make UBS one of the largest banks in Europe. This offers UBS a critical size in many area to rival with large US banks.  It creates opportunities and should definitely be lucrative for shareholders. They can look forward to a higher dividend.

You seem very confident.

That's an exciting story. However, I know that this opinion does not resonate with everyone. I am well aware of the critical voices, especially in Switzerland, but I think people should see this more positively.

Isn't a big bank like the new UBS too big for Switzerland?

UBS is no longer a Swiss bank. UBS may still be based in Switzerland, but it has already become a global player. Such an achievement deserves respect.

David Benamou is Managing Partner and Chief Investment Officer at Axiom Alternative Investments. Founded in 2009, the company is an independent asset management company based in Paris, Geneva and London (through its subsidiary AXM Alternative Investments), specialising in European financials and covering the capital structure of financial institutions across both equity and credit. The company currently manages 2.3 billion euros through UCITS funds and dedicated mandates. These investment solutions are marketed in Europe to institutional clients, family offices, Private Banks and investment advisors.