Finance Minister Karin Keller-Sutter mentioned Sunday that Switzerland’s economic system would in all probability have collapsed if Credit Suisse had gone bankrupt.
Keller-Sutter advised an interview with Le Temps newspaper that the federal government had acted within the nation’s finest pursuits in swiftly arranging the takeover of Switzerland’s second-biggest financial institution by its bigger home rival, UBS.
Amid fears of a world banking disaster final month, investor confidence in Credit Suisse collapsed on March 15. The authorities then orchestrated a takeover the weekend earlier than the markets reopened on March 20.
Some 109 billion Swiss francs ($120 billion) have been placed on the desk between authorities ensures and the liquidity made obtainable by the Swiss central financial institution.
“Given the circumstances, we acted as best as we could to minimize the burden on the state and the taxpayers,” Keller-Sutter mentioned.
“Without determined intervention 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 among the many 30 banks deemed important to the worldwide banking system and, due to this fact, too large to fail.
But it suffered a string of scandals in recent times, and after three U.S. regional banks collapsed in March, it regarded just like the weakest hyperlink within the chain.
Double-quick deal
The takeover talks have been rapidly performed at Keller-Sutter’s Finance Ministry in Bern, and the $3.25 billion deal was introduced on the night of March 19.
“The bank would have gone bankrupt on Monday, March 20. For what? Because over the years, there has been a culture that seems to have created the wrong incentives. Because there have been many scandals,” mentioned Keller-Sutter.
As for whether or not any executives could be delivered to justice, she mentioned, “It’s difficult and complex.”
She mentioned the federal government’s precedence was to finish the merger. UBS on Wednesday mentioned it ought to shut the takeover inside the coming months.
The Finance Minister mentioned it was too quickly to speak in regards to the future construction of the UBS, which is able to grow to be a mega-bank with some $5 trillion in invested property.
Keller-Sutter mentioned the federal government must analyze what occurred totally after which adapt the rules on banks thought-about too large to fail.
“But there are limits. Let’s not forget that … confidence cannot be regulated.”
Source: www.dailysabah.com
