Liquidating Credit Suisse would have caused “considerable” economic damage, Swiss Finance Minister Karin Keller-Sutter said in an interview published by the Neue Zürcher Zeitung (NZZ) newspaper on Saturday. UBS’s emergency takeover of Credit Suisse for a pittance and strong financial guarantees from the authorities is widely criticized in Switzerland.
He explains that he has come to the conclusion in recent weeks that while liquidating a global systemically important bank like Credit Suisse is legally possible thanks to the “too big to fail” law, “in practice, the economic damage would be considerable.” Furthermore, he argues, “Switzerland would have been the first country to liquidate a global systemically important bank.” “Now was clearly not the time to experiment.”
The government, the Swiss central bank (SNB) and Finma, the market watchdog in Switzerland, “agreed that a reorganization or bankruptcy of CS with a separation of Swiss activities, as foreseen in the emergency plan “too big to go bankrupt.” It would probably have triggered an international financial crisis,” the minister said.
No foreign pressure or late action
According to a poll published on Friday by Swiss public radio and television, the majority of Swiss people (54%) disagree with UBS’s acquisition of Credit Suisse. “That many have anger in their stomachs, I understand it very well,” says the minister. “I admit that it is also difficult for me to accept it. Especially when management errors have contributed to this situation ”, but, he continues,“ the solution adopted was the one that best protected everyone ”. In case of nationalization, he explains, the Confederation should have assumed all the risks.
Karin Keller-Sutter also claims that no foreign pressure has been brought to bear on Switzerland. “No one pushed us in any particular direction. But it was clear to everyone, including ourselves, that a Credit Suisse cleanup or liquidation would cause serious international disruption to financial markets.”
The minister also sweeps away those who accuse the authorities of having acted too late when Credit Suisse had been in crisis for two years, embroiled in a series of scandals. “My department, the SNB and Finma discussed emergency scenarios as early as January, on my second day on the job as finance minister. This had to be done behind the scenes so as not to damage confidence in CS,” she says. And “I informed the entire Federal Council (government) of the emergency scenarios in early February,” she adds.
Source: BFM TV
