Proxy adviser Ethos: UBS should have spun off CS' Swiss business

ZURICH, Aug 31 (Reuters) - UBS (UBSG.S) should have spun off Credit Suisse's Swiss business, proxy adviser Ethos said on Thursday, after Switzerland's No. 1 bank annnounced plans to fully integrate its former rival's home market business.

"We are disappointed as the spin off would (have) been a better option to avoid a major systemic risk for Switzerland, an important negative impact on employment and issues for the fair competition of the Swiss financial market," Ethos Director Vincent Kaufmann said in an emailed statement.

Ethos, which has backed a class-action lawsuit seeking a better price from UBS for the takeover, said UBS' massive second-quarter financial gain related to the takeover confirmed Credit Suisse was "significantly undervalued" in the deal.

Reporting by Noele Illien; writing by Brenna Hughes Neghaiwi; editing by Friederike Heine

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