Read news from:
Austria
SHARE
COPY LINK
For members

ECONOMY

Reader question: Will Credit Suisse crisis impact my savings in Switzerland?

In many people’s minds, Swiss banks are synonymous with scandals. Past and present events have shown this is sometimes true, but what — if any — effect will all these financial wheelings and dealings have on your money?

Published: 16 March 2023 11:21 CET
Reader question: Will Credit Suisse crisis impact my savings in Switzerland?
Your money is safe in Credit Swiss and other Swiss banks. Image by Peggy und Marco Lachmann-Anke from Pixabay

Usually, things that happen in Switzerland don’t reverberate around the world — except when the country’s banks are involved.

Living in a globalised and interconnected world means that scandals plaguing a Swiss bank, especially the nation’s second-largest one, will affect markets far beyond Switzerland’s borders.

And failures attributed to Credit Suisse, which sent its shares into free fall on Wednesday, are many:

Credit Suisse: The list of scandals stalking Switzerland’s second largest bank

Fortunately, as financial markets plunged in response, the news came that the beleaguered bank will borrow up to 50 billion francs from Switzerland’s central bank (SNB); after the announcement, Credit Suisse shares jumped more than 30 percent when markets opened early on Thursday.

READ MORE: Credit Suisse shares surge after 50-billion-franc lifeline from Swiss central bank

What impact is this crisis having?

You may think it impacts only the bank itself and the financial sector in general, but the consequences are far wider.

Such an event “harms society as a whole, rather than just the investors who took the risk,” according to economist Samuel Bendahan. 

“The real risk is the crisis of confidence,” he said, referring to loss of trust that can damage the bank’s image and reputation.

And, “if the economy suffers, everyone pays.”

What about the clients? Should they worry about their money deposited in Credit Suisse?

“No, not really, because there is a guarantee for small deposits in Switzerland,” Bendahan pointed out.

As The Local reported on Wednesday, Swiss banks, including Credit Suisse, are “very safe,” in international comparison, both in terms of capital and liquidity, according to Robert Reinecke, spokesperson for Swiss Banking Association (SBA).

“They have a very robust capital base even in stress scenarios,” he added.

Assets deposited in either Swiss banks or foreign financial institutions that operate a branch in Switzerland must be licensed, regulated, and supervised  by the Swiss Financial Market Supervisory Authority FINMA.

As an additional safety measure, “Swiss law demands capital adequacy standards” to ensure solvency, according to SBA.

While your deposits are covered up to 100,000 francs, there are additional protections in place as well for customers of cantonal banks.

According to Moneyland consumer platform, “many cantonal governments fully guarantee the account balances of their corresponding cantonal banks.”

This article has more information about how your money is protected in Switzerland:
 
How safe is your money in a Swiss bank? 

Is this the first time a Swiss bank has recorded major losses?

No.

As a consequence of risky expansion strategies in the midst of the 2008 global financial crisis, UBS faced a 20-billion-franc deficit — the largest ever in Swiss history.

The Federal Council and the SNB stepped in to save Switzerland’s largest bank from ruin by injecting 60 billion francs to restore some of the bank’s assets.

READ MORE: ANALYSIS: How the latest banking scandal has damaged Switzerland’s reputation
  
 
 

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

COST OF LIVING

‘It is deceit’: Are Swiss retailers shortchanging consumers?

You may or may not have noticed it when you shop, but many products in Swiss supermarkets have got smaller, while their price has remained the same. What is this about?

Published: 17 April 2024 11:55 CEST
‘It is deceit’: Are Swiss retailers shortchanging consumers?

The simple answer to this question is ‘shrinkflation’, which happens when consumers receive less product for the same price.

These products have ‘shrunk’ either in terms of weight or volume, but the price remains the same.

To be fair, this phenomenon is prevalent in many countries, and not just in Switzerland.

Now a new analysis carried out by a Foundation for Consumer Protection (SKS) jointly with public broadcaster SRF, shows how large Swiss distributors like Migros and Coop play their part in this practice.

Many price increases are so subtle that shoppers may not even notice them, according to SKS head Sara Stalder.

“Retailers like to publicise price reductions, but increases are very well concealed,” she said.

“In the criminal sense it is not fraud, but it is certainly deceit.” 

Size matters

So which products have been hit by shrinkflation? These are just some of the study’s findings:

Kiri cream cheese

A pack has lost weight: from 160 to 144 grammes, to be exact, while its price hasn’t budged, which means an 11-percent price increase.

Margarine

The study focused on the Becel brand, the tub of which is now 25 percent smaller.

However, it costs the same as before — which also translates into an 11-percent price hike.

Frozen fish

Although it still costs the same, a pack of Bordelaise-style fish filet from Findus sold at Manor supermarkets now weighs 400 grammes — 20 grammes less than previously.

Tampax tampons

Instead of 22 tampons per pack, there are now only 20 for the same price, which means consumers now have to pay 10 percent more for this product.

But the shrinkflation phenomenon doesn’t only reduce the size of the product sold in supermarkets; it also means manufacturers resort to using cheaper raw materials to cut costs.

One such example are Milka biscuits, which were previously made with sunflower oil, but now the less expensive palm oil is used in the production process.

This kind of ingredient switch “is common,” Stalder said.

Can consumers do anything to counter shrinkflation?

There is at least one instance where consumers were able to force the manufacturer to backtrack.

A few years ago, Coca-Cola bottles were downsized,  from 500 to 450 millilitres, while the price stayed the same.

Faced with a massive criticism, the company backed down and re-introduced the ‘old’ bottles. 

And retailers can have a say too.

For example, Migros and Coop which, like Manor, also sell Bordelaise fish, adjusted its price downwards when the weight dropped.

“This shows that lower prices are possible,” Stalder said. “Big retailers are more powerful than they pretend. They can negotiate better prices.” 

READ ALSO: What will be cheaper and more expensive in Switzerland in 2024?

SHOW COMMENTS