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ECONOMY

Bank takeover ‘prevented Swiss economy collapse’

Swiss Finance Minister Karin Keller-Sutter said Switzerland's economy would probably have collapsed had Credit Suisse gone bankrupt, in an interview published Sunday.

A signs of Swiss bank Credit Suisse is seen in Basel.
A sign of Swiss bank Credit Suisse is seen in Basel. . Photo: Fabrice COFFRINI / AFP)

Keller-Sutter told Le Temps newspaper that the government had acted in the country’s best interests in swiftly arranging the takeover of Switzerland’s second-biggest bank by its larger domestic rival UBS.

Amid fears of a global banking crisis last month, investor confidence in Credit Suisse collapsed on March 15, with the government then orchestrating a takeover during the weekend before the markets reopened on March 20.

Some 109 billion Swiss francs ($120 billion) have been put on the table between government guarantees and the liquidity made available by the Swiss central bank.

READ ALSO: Swiss government to investigate why Credit Suisse crumbled

“Given the circumstances, we acted as best we could to minimise the burden for the state and the taxpayers,” Keller-Sutter said.

“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 30 banks worldwide deemed 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 US regional banks collapsed in March, it was left looking like the weakest link in the chain.

Double-quick deal

The takeover talks were hastily conducted at Keller-Sutter’s finance ministry in Bern and the $3.25 billion deal was announced on the evening of March 19th.

“The bank would have gone bankrupt on Monday, March 20th. 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,” said Keller-Sutter.

As for whether any executives would be brought to justice, she said: “It’s difficult and complex.”

READ ALSO:

She said the government’s priority was to complete the merger. UBS said Wednesday it should close the takeover within the coming months.

The finance minister said it was too soon to talk about the future structure of UBS, which will become a mega-bank with some $5 trillion in invested assets.

Keller-Sutter said the government would have to analyse what happened in full, and then adapt the regulations on banks considered too big to fail.

“But there are limits. Let’s not forget that… confidence cannot be regulated.”

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ECONOMY

UBS marks takeover milestone as Credit Suisse is no more

Swiss banking giant UBS on Friday completed the merger of its parent company with Credit Suisse AG as its fallen rival legally ceased to exist, more than a year after the emergency takeover.

UBS marks takeover milestone as Credit Suisse is no more

In March 2023, Switzerland’s biggest bank was strongarmed by the government into buying Credit Suisse over fears that the second largest lender in the country might go under and spark a global financial crisis.

In a statement, UBS said Credit Suisse AG — or limited company — had been deleted from the Canton of Zurich’s commercial register, and has thus ceased to exist as a separate entity.

The bank added that Credit Suisse AG’s clients are now considered to be clients of UBS AG.

READ ALSO: Is the UBS takeover of Credit Suisse good for the Swiss economy?

However, Credit Suisse customers may continue to use Credit Suisse tools and platforms for an interim period, except in certain cases.

“Today we have achieved a significant milestone in our integration journey,” said UBS chief executive Sergio Ermotti.

Under pressure from the Swiss government, UBS agreed to take over the troubled lender for $3.25 billion, a modest sum for an institution ranked among the 30 banks worldwide considered too big to fail.

However, the takeover opened up a new chapter for UBS, which found itself forced to clean up a bank rocked by repeated scandals.

After the takeover was completed in June 2023, the two banks had initially continued to operate separately.

But with Friday’s merger, UBS has taken over Credit Suisse’s rights and obligations.

“The merger of our parent banks is critical to facilitating the migration of clients onto UBS platforms,” Ermotti said.

“It will also unlock the next phase of cost, capital, funding and tax benefits from the second half of 2024,” he added.

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