Economiesuisse warns against rushing to regulate banks

© Keystone / Michael Buholzer

The collapse of Credit Suisse must be carefully analysed before any decision is taken to tighten banking regulations, according to the director of Economiesuisse.

“Despite all the legitimate irritation, we must avoid making hasty decisions,” said Monika Rühl in an interview with La Liberté paper published on Saturday. She is counting on the reports that the government will have to commission – at the request of parliament – to make an initial analysis. But she calls on politicians to be cautious.

“There is no point in strengthening regulation in Switzerland without looking at what is being done elsewhere,” she said.

+ The global impact of Credit Suisse collapse

Rühl does not want UBS to be regulated differently in Switzerland given that it is an international bank. For her, requiring 20% equity capital makes no sense in a global economy. 

“A hasty and isolated decision would have repercussions on the system that we cannot control,” she warned. While Rühl is aware that Swiss banking credibility is at stake she fears that Switzerland is turning in on itself. Liberal principles are still “a very good recipe”, she concluded.

Rühl’s concerns about hasty decisions were also echoed by the Finance Minister Karin Keller-Sutter. In an interview with Le Temps paper, she said that the first priority was to stabilise the Swiss financial centre and only then the laws must be analysed and finally adapted. However, she is aware that the “too big to fail” regulation will have to be examined in depth.

She regrets that a culture that created bad incentives had developed despite the banking scandals. “The impression is that Credit Suisse did not learn too many lessons from these cases,” she says. She is frustrated by an economic sector that is always asking for more help from the state.

“The coronavirus pandemic was a turning point,” she said, with the federal government having incurred debts of up to CHF30 billion to support companies. “A liberal state postulates that freedom and responsibility are inseparable,” she added.

The Swiss government decided to guarantee the Swiss National Bank’s loans for the takeover of Credit Suisse by UBS, amounting to CHF109 billion. The SNB has also provided the two banks with an additional CHF150 billion in liquidity.