After Credit Suisse’s collapse, how can we avoid another debacle in the Swiss banking sector?
The demise of Credit Suisse, Switzerland’s second largest bank, has shaken the financial world. The takeover of Credit Suisse by UBS has also sparked the anger of Swiss politicians. All the risks are now on the shoulders of a single Swiss giant bank. How can another debacle be avoided in the future?
This will be the topic of our next Let’s Talk discussion, between economist Marc Chesney and financial journalist Myret Zaki. Share your opinion with us!
From the article Why a monster UBS bank scares Switzerland
From the article Let’s Talk: the future of Crypto Nation Switzerland
Beyond any dutiful reasoning, it can be suggested that:
- more banks = healthy and competitive market
- fewer banks = more external and institutional constraints and concentrated problems
I am for the +
Al di là di ogni doveroso ragionamento, si può suggerire che:
- più banche = mercato sano e concorrente
- meno banche = più condizionamenti esterni ed istituzionali e problemi concentrati
Sono per il +
The mega bank that has been created becomes a bureaucratic concentration where you will lose the customer who will become just a number.
It was better to have a temporary consortium of banks to lift up the CS of course with the support of the federal state.
Then review the mega salaries paid or to be paid.
La mega banca che si è venuta a creare diventa una concentrazione burocratica dove si perderà il cliente il quale diventerà solo un numero.
Era meglio un consorzio temporaneo di banche per risollevare il CS naturalmente con l'appoggio dello stato federale.
Rivedere poi i mega stipendi pagati o che si dovranno pagare.
All companies should concentrate on their purpose ie to make a good return on shareholder capital both in the short and long term. They should stop playing politics, such as backing the climate scam, and avoid anything governments subsidise or give tax concessions. Investment risk taking is fine as it can increase the return to shareholders but the risks need analysis and continuous assessment. Credit Swiss is an example of poor management both in where to invest and in continuous assessment.
Didn't the management of CS work excellently according to the principle "privatize profits, socialize costs" because the profits of the last 10 years are with the shareholders and the general public can now answer for the debts?
Hat das Management der CS nach dem Prinzip "Gewinne privatisieren, Kosten sozialisieren" nicht hervorragend gearbeitet da die Gewinne der letzten 10 Jahre bei den Aktionären sind und für die Schulden nun die Allgemeinheit gerade stehen kann?
We are always there corruption is the cancer of democracies if then none of those responsible pay , then there is no hope
Siamo sempre lì la corruzione è il cancro delle democrazie se poi nessuno dei responsabili paga , allora non c’è speranza
Cryptocurrency and banks "too big to fail" are both liabilities. The former uses too much power, and the latter is too subject to political corruption. This is true anywhere, but especially in America where I'm from, and Switzerland where my wife is from.
-Eric Burr, Mazama WA USA
I believe that we sometimes forget why failure is good. Failure in banking is when potential depositors no longer believe placing their money in a bank is in their best financial interests. If we remove failure, we remove the biggest motivator for banking management to run an institution profitably and efficiently with the least amount of risk. After that, the very best adapt quickly to external changes while the worst fail to even recognize the external change.
As consumers, we will gravitate towards the banks that are properly managed. The solution is counter intuitive. We must remove the safety net from banking and make it easier for banks to fail. The benefit of allowing banks to fail quickly is that small poorly run banks will never "grow up" to be large poorly run banks and therefore never have the ability to adversely impact local or global economies.
Lastly, having an insurance system that protects investors, where the investors pay the premiums and the premiums are based on the health of the bank, would both help the average consumer and promote the use of healthy banks.
Lobbying must be made transparent. If we know that CS paid billions to our parliament we'll we will know who is responsible for no one, not one of CS managers going bankrupt, selling their mansion or going to prison...People were not ask, decision was done very quick, I have never seen swiss goverment being so quick, not even during global pandemic so it leads to me thinking they knew about everything all along and decided it beforehand. For how many years goverment just closed their eyes on CS illegal activities... I want our financial minister in prison, he did not control shit.
The people who make money out of banks are the top bankers and investors. They should have bailed out CS, not the Government. Will this bailout taxpayers money get repaid? I doubt it. I see all the profits and wonder why my account interest rate is almost zero. Practically no incentive to save. But at least what little I have is apparently safe. If a bank goes under, there is insurance to pay back poorer clients. Or so the bank says.
Lovely article. Thank you all
My angry response today after having to deal with them on line because I lost access to my account is Basel Cantonal Bank.
They updated their systems, it seems without testing, and now my family has issues with logging in and performing functions that were before working 100%.
Why my anger.. because these banks seem to have so much money and seem to think they have to make it look like they are improving things.. why fix something that is not broken...
So if these banks cannot look after their everyday customers, how can we expect them to deal with anything a little bit harder....
As a foreigner I'm of the mind that the Swiss Banks have the Swiss in their hands and play with us all...
Banking should not be that hard... surely????
let's face it. This is a complicated topic. Difficult for the ordinary folks like us to offer a solution. unfortunately politicians are just ordinary folks too, therefore have no clue (like me).
it is made to sound complicated.
NORMAL banking is you Depositing and Taken out.
Anything above that is 'their risk'... that's why those people pay accountants to look after their high risk investments and most 'ordinary folks' don't have enough to hire expensive Accountants.
Maybe this is helpful: https://www.permaculturenews.org/2012/08/08/the-money-myth-exploded/
Checks, checks and checks.
Kontrol, Kontrol und Kontrol.
FINMA was sleeping on the job.
Can FINMA do its job at all in today's social and therefore political environment?
How long ago did politicians in Switzerland take the position that "the state should stay out of the free market economy and not impose any restrictions" - in other words, free rein for the free market economy?
If FINMA, according to FINMASA Art. 4, wants to strengthen the reputation, competitiveness and future viability of the Swiss financial center, then in my opinion it should be represented on the board of directors and executive management of all major financial institutions in Switzerland and, if possible, abroad. Who still remembers the one or other forced merger initiated by banks that increased the sell-out and dependency of Switzerland, weakened Switzerland as a business location and ultimately weakened confidence in the banks and thus also the financial center in Switzerland? How does FINMA intend to protect the banks and the banks' shareholders from themselves?
And what would be the use of controls if it required means that in a constitutional state only an intelligence service and, to a limited extent, the police would be allowed to have?
Kann die FINMA überhaupt ihre Arbeit machen bei den gesellschaftlichen und folglich politischen Rahmenbedingungen von heute?
Wie lange ist es her als Politiker in der Schweiz sich auf den Standpunkt stellten; "der Staat sollte sich aus der freien Marktwirtschaft raus halten und keine Einschränkungen machen" - also Narrenfreiheit für die freie Marktwirtschaft?
Wenn die FINMA nach FINMAG Art. 4 das Ansehen, die Wettbewerbsfähigkeit und die Zukunftsfähigkeit des Finanzplatzes Schweiz stärken möchte dann müsste sie m.E. im Verwaltungsrat und Geschäftsleitung von allen grösseren Finanzinstituten in der Schweiz und nach Möglichkeit im Ausland vertreten sein. Wer mag sich noch an die eine oder andere von Banken initiierten Zwangsfusion erinnern die ein Ausverkauf und Abhängig-machen der Schweiz verstärkt, den Wirtschaftsstandort Schweiz geschwächt und letztendlich das Vertrauen in die Banken und somit auch den Finanzplatz in der Schweiz geschwächt haben? Wie gedenkt da die FINMA die Banken und Aktionäre der Banken jeweils vor sich selbst zu schützen?
Und was nützten Kontrollen falls es Mittel bräuchte die in einem Rechtstaat nur ein Nachrichtendienst und beschränkt die Polizei haben dürfte?
Money has occupied my thinking for many years.
I'm interested in the creation of money.
I'm interested in gold as a backing for money.
I was a believer in 'one bank' but when I see how the Canadian government controlled accounts over the Truckers, then I'm not so sure anymore..
However, right now and more so after CS ?? collapse/corruption/silliness.. I'm asking more and more...
Why doesn't a country have just one bank for all citizens/residents and this would include 'businesses'.. Money belongs to a country and its citizens as a starting point... It is humans that create value...
So if there was a bank that was owned by Citizens and that bank charged fees then we could reduce GWST etc., etc., surely?
If you want to make an investment then you go to a Private Bank and they advise you and you transfer your money from your 'normal citizens bank' [that is used for everyday transactions ..] to the private bank and then you are in the risk and not supported by Citizens Taxes/fees to get you out of trouble...
The only portion of CS money/accounts that should be backed at the moment, is where people have money in an account for normal purposes and not investment!! Anything else is at your risk, totally...
I'm a follower of the likes of Professor Richard Werner or Catherine Austin Fitts... when it comes to understanding money and money creation....
Why should Citizens everyday money be controlled and governed by Executives... who make profit from creating money as debt?
Why do we have so many banks in Switzerland or other countries doing what is really normal things and that is to 'transact'... It is not rocket science to have money in an account just for buying everyday items etc. so why all these banks ?
I also think about a transaction tax/fee on everything but that goes into running society and we stop this ludicrous idea of Taxation which is skewed to 'valuing' one person/company against another and decided on by Poltiicians / advisors to the government who hole the big stick to beat anyone that doesn't agree with them.
Again, I'm just thinking about this stuff. I'd like to think that I have the solution but...
Basic economics, in my limited training, is: I grow carrots and sell them/trade them with you for potatoes... Or you feed me while I build you house.. but where does money come from .. really... gold has no value unless someone gives you something to replace it !!!??? Money makes it easier to just transact but it has become a magical thing that we are all to scared of when in fact the normal person in the street should/could understand basics, surely?
So it is not about, for me, a Bank having Capital.. but hold money for Citizens and those that want to risk their savings can do so but with a pure Investment Bank that does everything for them and then we could really see how good these Financial people really are...
We originally put money in Banks to keep it safe.. from ??
I'm not against cryptocurrency either but it has to be run by honest people and not corrupted and those that are dishonest.. need to be punished when they do something dishonest...
All societies have developed on a certain amount of trust.. the more that is eroded, then we are getting deeper and deeper into trouble...
Very good points that you raise. That's why most countries have State-owned "post office" accounts where citizens can hold their salaries and small savings without risk.
thanks for your reply.
Are there really Countries that still own their Post Offices for these purposes... ?
Is it true that not even Die Post is completely owned by the Swiss Citizens anymore?
The banking and finance industry is an extremely complex and specialized field in which ordinary people do not have the expertise to participate in specific operations.
By passing the emergency law and using huge amounts of money to bail out the big banks, the government is moving everyone's cheese. I see at least three deep-rooted questions:
1. why should all Swiss people bear the consequences of the big trouble caused by a few bankers?
2. do the Swiss people have the right to say "no" to government decisions through direct democracy?
3. why did existing financial regulations and institutions fail to prevent the collapse of the big banks?
These questions are not only about finance and financial regulation, but also about social justice and civil rights.
There is no shortage of competent and decent professionals in Switzerland, except that we hardly hear their voices (if they differ from the mainstream view). Who is suppressing their voices?
银行金融业是极为复杂的专业领域，普通人不具备参与具体操作的专业知识。
政府通过紧急法，用巨额资金去拯救大银行，却是动了所有人的奶酪。我至少看到三个深层问题：
1. 为什么少数银行家闯下大祸，却要全体瑞士人承担后果？
2. 瑞士人民有权通过直接民主对政府的决策说“不”吗？
3. 为什么现有金融监管法规和机构没能防止大银行崩塌的发生？
这些问题涉及的不仅仅是金融和金融监管，也涉及社会公正和民权。
瑞士不缺能干而又正直的专业人士，只不过我们几乎听不到他们的声音（如果不同于主流观点的话）。谁在压抑他们声音呢？
Excellent points!
It will be interesting to see if there will be a referendum soon to nullify this appalling risk to Switzerland.
good points,
but what is so complex about keeping a citizens money/cash safe ? so that we can transact !!! Isn't rocket science.
The only thing complex is because all these so called systems have been designed to make a profit and then it gets more and more complex..!!!!!! and maybe because everyone is trying to avoid paying tax, so then systems are put into place to avoid that... it is a never ending circle....with the current systems.....
According to the motto "small is beautiful", split up into agile small banks that cover niche markets and are not systemically relevant (hate that word). There can also go bankrupt once without global impact. The CS-UBS deal, as it stands, is in my opinion a sheer madness, with a state guarantee of 109 billion in a direct democracy, one should actually think that the voters are involved.
Nach der Devise "small ist beautiful" aufsplittern, in agile Kleinbanken, welche Nischen märkte Abdecken und nicht Systemrelevant (hasse das Wort) sind. Da kann auch einmal eine Pleite gehen ohne weltweite Auswirkungen. Der CS-UBS Deal, so wie er steht, ist nach meiner Meinung ein heller Wahnsinn, mit einer Staatsgarantie von 109 Milliarden in einer direkten Demokratie sollte man eigentlich meinen, dass der Stimmbürger einbezogen wird.
This article is very informative and is absolutely correct. No money from the citizen !
Bold
Dieser Beitrag ist sehr informativ und ist absolut richtig. Kein Geld vom Bürger !
Küre
I think that the banks should be required to have a larger share of equity capital in the case of greater risks, as has already happened in the past. How else could UBS have helped Mr. Blocher to take over Ems Chemie? As a divided small bank, certainly not.
Ich denke, dass die Banken bei grösseren Risiken einen grösseren Anteil an Eigenkapital vorgeschrieben werden sollte, wie es schon früher geschehen ist. Wie hätte sonst die UBS Herrn Blocher zur Uebernahme der Ems Chemie verhelfen können? Als aufgeteilte kleine Bank sicher nicht.
What form of equity capital should this take?
In the case of equity in the form of real estate or securities, all that needs to happen is for another economic crisis to roll in and the equity is worth nothing.
In welcher Form von Eigenkapital sollte dieses Vorliegen?
Bei Eigenkapital in Form von Immobilien oder Wertpapieren muss nur wieder mal eine Wirtschaftskrise herein rollen und schon ist das Eigenkapital nichts wert.
Thank you for your contributions. The government used emergency law to manage this crisis. Was this legitimate in your opinion?
Merci de vos contributions à toutes et à tous. Le gouvernement a eu recours au droit d'urgence pour gérer cette crise. Cela était-il légitime selon vous?
The executive branch should disclose whether the use of emergency law was legitimate.
What would have been the consequences if the Federal Council had not intervened? How many homeowners would have had to pay back part of their mortgage and ultimately lost their home?
And what would have been the consequences for companies? How many companies would have had worse credit conditions and gone bankrupt?
Ob der Griff ins Notrecht legitim war sollte die Exekutive offenlegen.
Was wären die Folgen gewesen wenn der Bundesrat nicht eingeschritten wäre? Wieviele Eigenheimbesitzer hätten dann ein Teil ihrer Hypothek zurück zahlen müssen und letztendlich ihre Wohnung verloren?
Und was wären die Folgen für die Unternehmen gewesen? Wieviele Firmen hätten dann schlechtere Kreditbedingungen gehabt und konkurs gegangen?
Probably, yes.
However, the regulator and the central bank did far too little, far too late. This situation should have been dealt with much earlier and when it was a smaller issue.
Was it negligence on their part? A lack of courage? A lack of relevant experience ? I hope we find out one day and that this is never repeated, and in the meantime UBS and Switzerland are de-risked by selling off CS in whole or in parts.
Don't know anyone local with CS account or mortage from them. I don't think locals used CS really, only international companies, would be interesting to see such statistics who would be affected the most, and I doubt it would be swiss account holders
Constructive proposal: Now that CS has been rescued via emergency law, it would certainly make sense - possibly only for a limited transitional period - to manage UBS in five regions as balance-sheet-separate entities.
This could also be done via emergency law and might even be exemplary instead of waiting again for a crash of a superbank.
P.S. The five units - it would also be possible to have only three or four - follow the once proposed division of Switzerland (which never came about) into five parts.
Konstruktiver Vorschlag: Da nun die CS via Notrecht gerettet wurde, wäre es sicher sinnvoll - möglicherweise auch nur während einer begrenzten Übergangszeit - die UBS in fünf Regionen als bilanziell getrennte Einheiten zu führen.
Auch dies könnte via Notrecht geschehen und wäre vielleicht sogar vorbildlich anstelle eines erneuten Wartens auf einen Crash einer Superbank.
P.S. Die fünf Einheiten - es wären auch nur drei oder vier möglich - folgen der einst vorgeschlagenen Einteilung der Schweiz (die nie zustande kam) in fünf Landesteile.
What is the benefit of splitting into several units if they are then directly or indirectly linked to each other again? For example, if investment banking borrows money from the credit bank. If investment banking then speculates, the credit bank also has a problem.
Worin liegt der Nutzen einer Aufteilung in mehrere Einheiten wenn diese dann direkt oder indirekt wieder miteinander verbunden sind? Zum Beispiel wenn das Investmentbanking sich von der Kredit-Bank Geld leiht. Wenn sich dann das Investementbanking verspekuliert hat auch die Kredit-Bank ein Problem.
Because they can sloe the branches. Foe example the mortage one can stop giving mortages and let the smaller bank to handle it until all ex cs clients are gone. Diving the Bank will be beneficial to get rid of the bad clients CS eagerly aquarelle in past. Letting UBS absorb all the shit and keep it, will just make another CS in 5 years and flop
Instead of protecting the 'wrong-doers'...go after them at the first sign of shady businesses. The usual the rich protecting their clan.
All over the world we ask our elected officials to take all our responsibilities and to think right.
But where are the people who didn't even show up to vote and who spend their time questioning the decisions that were made for them?
Let's stand up and march to the front of our country; the people are the army in the front line.
Dans le monde entier on demande aux élus de prendre toutes nos responsabilités et de penser juste.
Mais où sont donc les personnes qui ne se sont même pas déplacées pour voter et qui passent leur temps à remettre en question les décisions qui ont été prises pour eux.
Debout et marchons au devant de notre pays; le peuple est l'armée en première ligne.
Nothing we can do. Citizens have no say in such questions as we just saw. So it's up to the giverment to actually do their job and look after banks being curropt but they don't. It is the second time already, and I think since UBS is so huge now it will fail even faster with the same management and clients from CS.
I don't have the answer either, not being in the banking/financial circle. But...there is NO such thing as 'nothing we can do'. Where there is a will, there is a way. Always turning the other cheek is counter productive.
Well since Covid I don't remember us deciding anything of real importance.
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