CREDIT Suisse Holding's suggested merger with Union Bank of Switzerland (UBS) was greeted with scepticism yesterday as commentators cited serious obstacles to the creation of Europe's biggest bank.

Swiss newspapers said the banks had so much in common that they would not bring much new to each other.

A merger, which would create the world's second biggest bank after Japan's recently merged Bank of Tokyo Mitsubishi Ltd, might also be politically unacceptable because it could cost up to 10,000 jobs in Switzerland.

The two banks had combined assets worth 799.5 billion Swiss francs (£419.5 billion) at the end of 1995.

The Zurich stock exchange, which gave merger talk a thumbs up on Tuesday by driving up the CS Holding and UBS share prices, had second thoughts and pushed down both banks' shares yesterday although the overall market rose.

UBS, which has confirmed discussing the merger idea with CS Holdings, said its board would meet today to discuss the proposal and planned to issue a statement afterwards.

The merger speculation began on Tuesday after a leading Swiss daily, the Tages Anzeiger, said CS Holding was trying to make UBS accept a merger by threatening to vote against UBS management at the bank's annual meeting next Tuesday.

CS Holding, parent of Credit Suisse bank, issued a statement confirming its chairman Mr Rainer Gut had raised the idea of a possible merger.