The liquidation of Credit Suisse would have caused “considerable” economic damage, Swiss Finance Minister Karin Keller-Sutter said in an interview published Saturday by the Neue Zürcher Zeitung (NZZ).
UBS’s emergency takeover of Credit Suisse for a low fee and strong financial guarantees from the authorities is widely criticized in Switzerland.
“All the other options were, in our opinion, riskier for the state, the taxpayer, the Swiss financial center and the international markets,” says Keller-Sutter.
Keller-Sutter explains that she has come to the conclusion in recent weeks that although the liquidation of a world-class 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 bank of global systemic importance.” “Obviously, this was not the time to experiment,” she adds.
The government, the Swiss central bank (SNB) and Finma, the Swiss market regulator, “agreed that a reorganization or bankruptcy of the CS with a separation of Swiss activities, as envisaged in the ‘too big to fail’ emergency plan ‘, would have likely triggered an international financial crisis,” the minister said.
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.
“I can understand that a lot of people are angry,” the minister said. “I have to admit that I have a hard time accepting it too.” Especially when management errors contributed to this situation”, but, he continues, “the solution adopted was the one that best protected everyone”.
In case of nationalization, he explained, the Confederation would have had to assume all the risks.
Keller-Sutter also says 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 reorganization or liquidation of the CS would cause serious international disturbances in financial markets,” he defended.
The minister also rejected those who accused 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 as finance minister. This had to be done behind the scenes so as not to undermine confidence in the CS,” he said.
And “I informed the entire Federal Council (Government) of the emergency scenarios at the beginning of February,” he adds.
Source: TSF
