Switzerland Today
Greetings from Zurich!
On Friday night, Switzerland had two systemically important global banks that were ‘too big to fail’.
Over the weekend, that number was whittled down to one – and it’s going to be a monster, with a balance sheet twice the size of annual Swiss economic output.
In case you missed it(!), Credit Suisse will be no more, having agreed to a forced union with UBS.
In the news: Credit Suisse, Credit Suisse and same sex marriages
- The failed Credit Suisse bank dominates the headlines, sparking a political row in parliament and calls from trade unions to protect workers who will inevitably lose jobs.
- In the meantime, the UBS CEO and chair are trying their best to make the takeover seem perfectly natural.
- The Credit Suisse saga even forced Swiss President Alain Berset to call off a trip to Colombia where he had hoped to gain insight into the progress of the country’s peace process.
- Elsewhere in the news, some 749 same-sex couples (mostly men) took advantage of a law change last year to tie the knot in marriage.
Credit Suisse – where to start?
The trouble with ‘historic’ events is that no-one really knows how they will end up – particularly when they amount to a last-ditch emergency measure born out of farce.
I don’t want to tempt fate, but the forced takeover of Credit Suisse by UBS could get messy.
The European Central Bank has already criticised Switzerland’s decision to burn CHF16 billion worth of Credit Suisse bonds. The bond market is already struggling to cope with global rising interest rates.
The Saudi National Bank and Qatar Investment Authority are ominously quiet about being frozen out of the decision-making process despite being major CS shareholders.
Last year, they pumped the best part of CHF4 billion into Credit Suisse when shares were trading at around CHF4. The conversion into UBS stock now prices their shares at CHF0.76.
The Swiss Ethos Foundation is threatening legal action, but there has so far been little reaction from the Middle East.
Maybe that’s because they can produce oil and gas faster than the Swiss central bank can print francs.
Switzerland decided to play loose with the law at the weekend. Assorted government ministers, bankers and regulators resembled football players throwing themselves headlong to clear the ball off the line in a goalmouth scramble.
It was an altogether frantic and undignified end to a bank created by Alfred Escher in 1856 to fund Swiss industrial growth.
Thousands of Credit Suisse staff now have serious doubts about their livelihoods. Many politicians are demanding action.
It’s no good having capital buffers when bank executives can get away with scandal and ignoring the rules, some argue.
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