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Credit Suisse has gone from being Switzerland’s public embarrassment to the secret shame of its politicians and regulators. The pivotal day was March 18, when Swiss officials marched the faltering lender up the aisle for a shotgun wedding to larger rival UBS.

Before then, deposit flight and cratering shares at Credit Suisse highlighted weaknesses in what was supposedly Europe’s safest banking market. Following the deal, the issue has been quite how little — Sfr3bn ($3.3bn) — Swiss authorities charged UBS for bolstering its market share.

One former Credit Suisse banker dismisses the idea that a “Swiss solution” was the only option. “It would have been very easy to get all the potential buyers on the line that weekend,” he says, “They managed that in US bank rescues.”

Credit Suisse’s domestic operation, Credit Suisse Schweiz (CSS), is the lightning rod for discontent. There is political pressure in Switzerland, which holds a national election on October 22, for UBS to divest the business. A poll in March suggested that three-quarters of Swiss voters favour a break-up.

But UBS chair Colm Kelleher and chief executive Sergio Ermotti seem minded to hang on to CSS. Some suggest that was one reason for their termination of state safety nets this month. UBS dispensed with a $10.3bn loss-protection agreement and a public liquidity backstop of up to $114bn. The move was widely interpreted as a sop to critics.

As well as being a European bank, UBS is also a globally important wealth manager. The prize asset the business gained from the March deal was Credit Suisse’s own wealth management division. This has taken pro-forma UBS fee-paying assets to an estimated $1.8tn.

Credit Suisse’s retail and commercial bank is also not be sniffed at. It made profits before tax of $1.7bn on revenues of $4.7bn in 2022. It had $193bn in outstanding loans last year, placing it third in Switzerland behind UBS and Raiffeisen Schweiz. It also has a private bank that helps recruit wealth management clients.

Hanging on to CSS gives UBS a quarter to a third of the domestic Swiss banking market. Antitrust rules were suspended to permit the takeover. Concerns persist that competition has been damaged, despite the strong position of Raiffeisen Schweiz and a gaggle of cantonal banks.

What might CSS be worth if UBS needed to sell or demerge it? Andrew Coombs of Citi recently valued the business at more than $18bn, but bearish analysts foresee a sticker price less than half that.

Either way, two compelling points still stand. First, any sale or spin-off of CSS would almost certainly be above the $3.3bn UBS paid for the whole of Credit Suisse, a price that does not even allow for the state wiping out $17bn of Credit Suisse’s liabilities as a sweetener.

Second, CSS is automatically worth more to UBS than its standalone value. Integrating the unit should produce cost savings. Amit Goel of Barclays estimates these at 10-30 per cent of group efficiencies of $8bn initially promised by UBS.

To left-of-centre Swiss politicians, “synergies” is a code word for thousands of job losses. At present, opinion polls point to consensual Swiss politics veering back towards the centre ground in October, taking some heat off UBS. Moreover, the deal does not currently rate as a significant electoral issue for big parties, according to political analyst Sarah Bütikofer. That might change if UBS announces job cuts.

Some pundits therefore think that Ermotti should wait until after the election to publish restructuring plans. This would be awkward, however. He has promised a decision on CSS “by the end of summer” at the latest. Quarterly results on August 31 would give him a platform for this, or at least an opportunity to soften resistance to the integration of CSS.

It will be a tricky balancing act. To keep investors happy, UBS needs to show that the absorption of Credit Suisse has started well, with client retention a key metric. For his broader audience, Ermotti will have to stress how many risks remain.

If the politicians currently in government press Ermotti privately concerning CSS, he could usefully point to the reality highlighted in research by Coombs. A demerger or disposal could easily increase rather than reduce embarrassment for the Swiss authorities. It would underline just how tiny the sticker price was for Credit Suisse compared with subsequent sums of its parts.

Leaving CSS in the hands of UBS is one way for Swiss legislators and regulators to spare themselves further blushes.

jonathan.guthrie@ft.com