These are intense, exhausting and difficult days for the Swiss financial center. And not just for the financial center, but for the whole country. Because the banking system plays an important role for Switzerland, its economy and its image. If the big bank UBS swallows up its ailing competitor Credit Suisse, the taxpayers will be at risk. And the deal means a number of job cuts.
It was announced on Sunday evening at a press conference by representatives of the government, the supervisory authorities and the two major banks. The conclusion: UBS takes over Credit Suisse for a good three billion euros. It is the result of several meetings over the weekend and is the most significant bank merger in Europe since the financial crisis 15 years ago. With the deal, UBS will become a mammoth institution that will be larger than Deutsche Bank.
The Swiss National Bank (SNB) is supporting the takeover with liquidity assistance of CHF 100 billion, around EUR 101 billion to both banks. In order to reduce risks for UBS, the Confederation also gives the bank a guarantee of CHF 9 billion to cover potential losses. The measures will ensure that the SNB can provide Credit Suisse with extensive liquidity if necessary.
The teetering Credit Suisse had recently suffered from a significant loss of investor confidence. The share price had fallen to a record low after the bank's largest investor ruled out providing further capital and the institution continued to struggle with cash outflows. The "Tagesanzeiger" had already set up a live ticker on the crisis at Credit Suisse in the middle of last week. The editorial on the UBS deal is headlined: "UBS' takeover is a historic scandal". It is the worst solution from the point of view of the customers, namely the internationally active small and medium-sized companies. "You are now at the mercy of one big bank." "Brutal job cuts" are coming to the employees. The competition in the Swiss banking sector will be weakened.
The "Neue Zürcher Zeitung" headlines their comment: "A zombie is gone, but a monster is emerging". A few months ago, nobody would have thought that Credit Suisse would fail. However, it is not an accident. There was "a destruction of value on a huge scale, the responsibility of managers who negligently underestimated risks and helpless board members who failed to control too often". UBS is now a "monster" because its new balance sheet total will be almost twice as large as Swiss economic output, "too big to fail" is back with full force.
SRF calls the deal a "forced marriage under difficult circumstances". The takeover is "a black box" for UBS. "She didn't really have time to analyze exactly what risks she was still bringing into the house with CS." Swiss radio and television asks: "How dangerous is that?" In any case, UBS must now cut down the large and risky investment banking of CS itself. That means a lot of effort. "But there are also many questions in other business areas."
In the tabloid Blick, the business editor asks: "Why did it take pressure from foreign supervisory authorities and finance ministries before the Swiss finally sat down and came up with an emergency solution almost overnight?" A solution that is at least the best of all bad solutions. The Credit Suisse case is also a case of the Swiss financial center. Because Switzerland was asleep and watched for far too long as the once proud Escher Bank slid with eyes wide open into its demise. The comment bears the title: "What remains is a financial square with a colossus".
The "St.Galler Tagblatt", which like many other Swiss local newspapers belongs to CH Media, is talking about a catastrophic solution. The fact that Credit Suisse is sold off at a bargain price is humiliating for the bank, its employees and the top bosses. Here, too, CEOs and board members are given as the reason for the failure of the bank. The commentary is entitled "Bank earthquakes: This catastrophe should never have happened".
The "Südostschweiz" writes of an "emergency solution that actually only produces losers". What was communicated on Sunday evening was the "tragic end of a tragedy". The newspaper "La Liberté" from western Switzerland describes yesterday as a "black Sunday" for Credit Suisse. The unthinkable had happened.
In any case, it is a spectacle that will continue to occupy the Swiss media as critical observers in the coming period.
Sources: NZZ, Tagesanzeiger, SRF, Southeastern Switzerland, St.Galler Tagblatt, Blick, La Liberté, with dpa material