GENEVA: UBS’s emergency takeover of its troubled Swiss rival Credit Suisse, with significant backing and arm-twisting from Bern, sparked fears on Monday it could weaken the country’s biggest bank and financial sector as a whole.
Switzerland was in shock after its largest bank had agreed under pressure from Swiss authorities to swallow up the second largest for $3.25 billion, in what the government insisted was a vital step to prevent economic turmoil from spreading throughout the country and beyond.
Swiss media and politicians alike expressed outrage felt that one of the country’s oldest and most iconic banking institutions went poof, insisting that despite a string of crises and scandals, it could have been saved.
Swiss authorities faced criticism for reacting too slowly as Credit Suisse — seen as the weakest link in European banking after several years of unrelenting scandals and crises — saw its share price implode last week amid market turbulence over the collapse of two US banks.
On the worst day of trading on Wednesday, when Credit Suisse saw it share price drop to historic lows, the central bank and regulators took a full day to announce a $54-billion lifeline for the bank, and the government waited until Sunday evening to speak publicly about the debacle.
Thierry Burkhart, head of Switzerland’s rightwing Liberals party, described the deal as “shameful for Switzerland”, and said was “a dark day for the Swiss financial sector and for Switzerland as a whole.” The Tages-Anzeiger daily meanwhile slammed the deal as “a historic scandal”, while the Tribune de Geneve said it was a “waste, socially (for jobs), economically (for the reputation of the country), and shameful politically for the politicians who were too slow to act.” Many acknowledged though that when push came to shove, there had been little choice. The government had said the only alternative to the UBS deal was a full nationalisation of Credit Suisse.
Published in Dawn, March 21st, 2023
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