Commentary on Credit Suisse takeover by Swiss authorities

CategoriesGamestop_, Issue 2023Q2

The deal is not yet set in stone..


via u/ Wurmholz

Today: Risks for taxpayers could continue

Keller-Sutter: “Risks for taxpayers could continue” In an interview with Swiss radio SRF, Federal Councilor Karin Keller-Sutter discusses the extraordinary bank rescue and potential consequences for the general public. The Swiss government is supporting a major banking merger with an unprecedented 250 billion CHF, causing outrage among citizens as the state guarantees astronomical sums for a large bank that has steered itself towards disaster.

Keller-Sutter acknowledges the public’s concerns and emphasizes that the government is not providing cash, but guarantees. Already, a significant amount in billions has been claimed under the guarantee granted by the government and the National Bank. The exact figures are unknown to her.

Toxic legacy assets within the bank present a high risk. The first 5 billion CHF is borne by UBS as the acquirer, while the state guarantees the next 9 billion CHF. Keller-Sutter admits that the risks for taxpayers could extend further, and the government is discussing the possibility of recouping future costs through profit-sharing with the merged bank.

Keller-Sutter believes the current solution is the best among bad options, as the risks for taxpayers would have been greater if the bank had been nationalized or declared bankrupt. She also criticizes Credit Suisse’s management for putting the country, the Federal Council, and all authorities in an impossible situation. The Swiss government’s rescue plan has met with criticism from political parties, with some calling for the healthy Swiss business of Credit Suisse to be separated from the new “banking monster.”

Will add two more links


Swiss Voters’ Opinion on the CS Takeover According to an SRG survey, the majority of eligible voters are angry and disagree with how the CS takeover was carried out.

Article about polling: SRF 4 News, 24.03.2023, 17:00 Uhr

Last Sunday, federal authorities and the heads of the two major banks held an extraordinary press conference to inform Switzerland and the world that UBS would be taking over troubled Credit Suisse. A representative survey by the GFS Bern research institute on behalf of SRG reveals that the Swiss are predominantly angry and uncertain about this forced merger.

Over half of Swiss voters disagree with how UBS took over CS with federal assistance, and almost no one fully supports the decision. Voters who sympathize with political extremes (Greens, SP, SVP) are more critical than those in the political center (GLP, FDP, Center).

Swiss National Bank (SNB) is considered the most credible actor in the past week, while trust in the Swiss Financial Market Supervisory Authority (Finma) is significantly lower. Notably, UBS management ranks second, appearing more credible than the Federal Council.

Among the parties, SP is perceived as the most credible, while less trust is attributed to SVP, the Green Liberals, and especially FDP, which all represent economic interests. Most surveyed voters believe that CS officials should now be held accountable (96%) and that more effective measures against exploitation in the banking sector are needed (93%).

The survey results show a broad perception of SP as a credible actor and unanimous criticism directed at management and those responsible for the crisis. The impact of these numbers on the election year remains to be seen.


Credit Suisse Shouldn’t Completely Disappear

FDP President Thierry Burkart now demands that the Swiss part of Credit Suisse be separated and made independent, arguing that it would be the best solution for Switzerland.

10vor10, 22.03.2023, 21:50 Uhr

The major bank should become much smaller, Burkart says, in order to preserve as many jobs as possible and create a better competitive situation in the Swiss banking sector for the benefit of Swiss customers, particularly SMEs. Additionally, this step would minimize risk for Switzerland if UBS were to falter.

The SVP also wants to prevent the complete downfall of CS. SVP sets conditions for approving the CHF 109 billion loan, according to Thomas Aeschi. “We need to think about how to restore competition,” he says. The SVP parliamentary group president is confident that Burkart’s proposal would restore competition in the Swiss banking sector.

This idea is not new and is provided for in the Too-Big-To-Fail law, which uses the separation banking system as a model. The individual areas of a bank are independent of each other, so if one area, such as investment banking, gets into trouble, it doesn’t drag down the rest of the bank.

Today, the Greens criticize that the opportunity was missed to take preventative action in time. Gerhard Andrey, a National Council member for the Greens, says something like a separation banking system is needed now, and blames conservative politics for failing to implement it.

The SP goes even further: SP President Cédric Wermuth considers the introduction of a separation banking system but concludes that “Switzerland is too small for such large banks. We need to find a way to minimize the risk in the medium term.”

The big question remains whether the political will for reform will still be present once the initial shock has subsided.

These are ChatGPT4 summaries

Leave a Reply