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ECONOMY

Swiss parliament to probe Credit Suisse takeover

Switzerland's parliament will probe the government-orchestrated takeover of the stricken Credit Suisse bank by larger rival UBS, in an extremely rare move, following a vote on Thursday.

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)

A parliamentary commission of inquiry will be established to shed light on how the Swiss authorities rapidly stitched together the merger of the wealthy Alpine country’s two biggest banks over a weekend in March.

After the lower house of parliament voted unanimously Wednesday in favour of creating the rare commission of inquiry, the upper chamber, or Council of States, voted 37-5 for it on Thursday.

The commission will examine “the legality, opportunity and effectiveness of the activities” of the Swiss authorities in the takeover. It will report on “gaps observed at the institutional level”.

Like UBS, Credit Suisse was among 30 international banks deemed too big to fail due to their importance in the global banking architecture.

But the collapse of three US regional lenders in March left Credit Suisse looking like the weakest link in the chain and its share price plunged more than 30 percent on March 15.

The Swiss government, the central bank and the financial regulators then stepped in and strongarmed UBS into a $3.25-billion takeover announced on March 19 before the markets reopened the following day.

The government feared Credit Suisse would have quickly defaulted and triggered a global banking crisis that would also have shredded Switzerland‘s valuable reputation for sound banking.

The commission will be composed of 14 lawmakers — seven from each house of parliament — with all the major parties represented. They will be nominated next week. It will have a budget of five million Swiss francs ($5.5 million).

With a broad remit, it will be able to decide the extent of its investigations and could trawl back over several years. There is no time limit but the commission will probably last more than a year.

The government said Friday it would give its “full support” to the commission, deeming it “useful and necessary to examine in detail” the events behind the emergency rescue.

It will be only the fifth parliamentary committee inquiry ever held in Switzerland.

The last was in 1995 and investigated failures surrounding the Federal Pension Fund.

It is the “most powerful” tool at parliament’s disposal, said Le Temps newspaper, with the authority to consult the government’s confidential minutes and question senior officials.

The merger of Credit Suisse into UBS, which should be finalised on June 12, raises serious concerns in Switzerland around jobs, competition and the size of the resulting bank relative to the Swiss economy.

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ECONOMY

Why is Switzerland Europe’s ‘most competitive’ country?

Not only is Switzerland the most competitive in Europe, but it is also in the second place worldwide.

Why is Switzerland Europe's 'most competitive' country?

In its new annual ranking, the IMD Business Institute named Switzerland the world’s second-best in terms of competitiveness. 

Singapore is in the first  place, which means Switzerland is in the top spot among European nations.

What does ‘competitiveness’ mean?

For the purpose of this survey, among the most reputable globally, IMD ranked 67 countries.

It examined and compared each nation’s GDP and productivity, along with political, social and cultural factors.

“Governments play a crucial role too, by providing an environment characterized by efficient infrastructure, institutions, and policies,” IMD said.

In what areas is Switzerland particularly competitive?

It is in the first place in terms of government efficiency — the position it has held since 2022.

Within this particular category, the country excels in public finance and institutional organisation.

It is also at the top for its infrastructure, particularly for health services, environment, as well as educational system.

In this category too, the country has maintained its first place for several years.

Switzerland also scores relatively high (second place) for productuvity and efficiency, as well as infrastructure for scientific research.

Where does Switzerland rank less well?

It is in the 16th place for international trade, in the 15th for ‘attitudes and values’.

And it should come as no surprise to anyone living here that the country ranks in the 61st place (that is, near the bottom), in terms of prices.
 

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