Did the Swiss government do enough to save Credit Suisse?

Swiss Finance Minister Karin Keller-Sutter and CS chair Axel Lehmann shake hands on the takeover deal in March: but was the rescue of the bank's business such a great triumph? © Keystone / Peter Klaunzer

The Swiss media have dug further into the government’s role in the demise of Credit Suisse – presenting a picture of confusion, dysfunction and mistrust that may have contributed to the banking emergency spiralling out of control.

By the autumn of last year, it was clear that years of chronic mismanagement had left Switzerland’s second-largest bank in a perilous position. This poses the question of whether the authorities could have acted earlier to prevent catastrophe.

+ Where did it all go wrong for Credit Suisse?

SWI swissinfo.ch pieces together a timeline of key events in the six months leading up to the fire-sale of Credit Suisse to rival bank UBS in March.

October 2022:

By October 2022 the writing was on the wall for Credit Suisse, as it announced a major restructuring and fund-raising exercise in the face of huge operational losses and a surge of wealthy clients withdrawing their assets.

The situation was so delicate that a single tweet (later deleted) by an Australian financial journalist on October 1 caused the bank’s share price to tumble.

Another clear signal of distress was that the bank was forced to pay more for Credit Default Swaps (CDS) – a financial instrument that offers insurance against losses. The Financial Times reported that bank executives had been forced to soothe investor concerns over CDS costs.

The then Swiss finance minister, Ueli Maurer, says he spoke to the Swiss National Bank (SNB) and the financial regulator about the situation during this month.

November 2022:

Maurer first alerted cabinet colleagues to the growing problems at Credit Suisse on November 2, 2022, according to a SonntagsZeitung report on August 20, 2023.

The newspaper also claims that SNB chair Thomas Jordan presented an idea to provide the bank with CHF50 billion ($57 billion) in emergency liquidity. Jordan is said to have brought up the subject of another CHF100 billion being made available if this sum was guaranteed by the Swiss state.

The SonntagsZeitung further states an extraordinary Federal Council (government) meeting was scheduled days later to go through the details, but the meeting was cancelled by Maurer before it could be held.

December 2022:

On December 15, weeks before stepping down as finance minister (as he announced in September), Maurer told Swiss public broadcaster, SRF, that Credit Suisse would “turn the corner” and should be left alone “for a year or two” to recover from its problems.

Credit Suisse chairman Axel Lehmann had earlier that month said that client outflows had “stabilised” and that the bank was “definitely stable”, which proved not to be the case.

Karin Keller-Sutter is appointed by parliament to take over from Maurer as finance minister at the start of 2023.

January 2023:

Keller-Sutter was reassured by Credit Suisse executives and the SNB that issues at the bank were under control, reported the SonntagsZeitung on August 20.

But the newspaper also claims that the Swiss Financial Market Supervisory Authority (FINMA) was concerned that the bank was slow in delivering relevant documents.

February 2023:

On February 1, Keller-Sutter first outlined to cabinet colleagues emergency contingency plans for Credit Suisse, says the SonntagsZeitung report in August. This included the concept of a Public Liquidity Backstop, or state-guaranteed loans of hundreds of billions from the SNB.

On February 9, Credit Suisse reported a CHF7.3 billion annual loss and admitted the full extent of client withdrawals of CHF110 billion in the last three months of 2022 – with another CHF60 billion later withdrawn in the first three months of 2023.

March 2023:

The month started badly with the collapse of Silicon Valley Bank in the United States and the US authorities forcing Credit Suisse to delay publication of its annual report due to doubts over accuracy of some figures. Credit Suisse’s major shareholder, the Saudi National Bank, further spooked the markets by saying it would not invest any more money in the Swiss bank.

+ Relive the drama of the Credit Suisse takeover weekend

These events sparked urgent meetings between the Swiss government, the SNB and FINMA. Rival Swiss bank UBS was instructed to prepare a bid to buy Credit Suisse on March 16, which was rushed through three days later with the government issuing emergency laws to see the CHF3 billion deal through.

April 2023:

Former Finance Minister Maurer breaks his silence to defend his record on Credit Suisse. He tells the media that he did not trust cabinet colleagues with detailed documents, fearing they would be leaked to the media.

June 2023:

A parliamentary committee of inquiry is set up to investigate the Credit Suisse debacle. Part of its mandate is to look at how the issue was handled by the Federal Council.