Switzerland’s finance minister said in an interview with Le Temps newspaper that the country’s economy would likely have collapsed if Credit Suisse had gone bankrupt – Copyright AFP/File MICHAEL DANTAS
Swiss Finance Minister Karin Keller-Sutter said in an interview published Sunday the Swiss economy would likely have collapsed if Credit Suisse had gone bankrupt.
Keller-Sutter told Le Temps newspaper that the government acted in the country’s best interest by expeditiously arranging the takeover of Switzerland’s second-largest bank by its larger domestic competitor UBS.
Amid fears of a global banking crisis last month, investor confidence in Credit Suisse collapsed on March 15, and the government then orchestrated a takeover over the weekend before markets reopened on March 20.
Around 109 billion Swiss francs ($120 billion) were put on the table between government guarantees and liquidity provided by the Swiss central bank.
“Given the circumstances, we did the best we could to minimize the burden on the state and taxpayers,” said Keller-Sutter.
“Without decisive action by the authorities, the alternative would have been a bankruptcy of Credit Suisse on Monday morning, accompanied by a probable collapse of the Swiss economy.”
Like UBS, Credit Suisse was one of the 30 banks worldwide that were of global importance to the international banking system and therefore too big to fail.
But it suffered a string of scandals in recent years, and after three U.S. regional banks collapsed in March, it looked like the weakest link in the chain.
– Double Fast Deal –
Acquisition talks were hastily conducted at Keller-Sutter’s Treasury Department in Bern, and the $3.25 billion deal was announced on the evening of March 19.
“The bank would have gone bankrupt on Monday March 20th. For what? Because over the years a culture has developed that seems to have created the wrong incentives. Because there were many scandals, »said Keller-Sutter.
As for any executives going to court, she said, “It’s difficult and complex.”
She said the government’s priority is to complete the merger. UBS said on Wednesday it should complete the acquisition in the coming months.
The Treasury Secretary said it was too early to talk about the future structure of UBS, which will become a megabank with around $5 trillion in invested assets.
Keller-Sutter said the government must fully analyze what is happening and then adjust regulations for banks deemed “too big to fail.”
“But there are limits. Let’s not forget that … trust cannot be regulated.”
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