MAJOR Swiss banking group Union Bank of Switzerland (UBS) announced last night that it was rejecting a merger proposal by competitor Credit Suisse Holding.

It said the decision was a unanimous one by the group board of directors, which met in Zurich last night.

Zurich market sources had said they expected the UBS board to reject the merger notion, as it was attached to the group's autonomy.

A merger would create a colossus with net profits of slightly more than three billion Swiss francs (£1.5 billion) a year and a balance sheet of about $419 billion, making it the second biggest bank after Tokyo Mitsubishi Bank of Japan.

Reports of an approach by CS Holding emerged on Tuesday from a secret telephone call by the president of CS Holding to UBS, ostensibly to deny reports that CS would back a revolt by the main shareholder in UBS.