The total cost of saving one of the largest banks in Switzerland – Credit Suisse – can reach 209 billion Swiss francs (about $ 226 billion), the bulk of these funds will be spent from the state treasury, so almost every Swiss will pay 12.5 thousand Swiss francs (about $ 13 5,000) for rescuing a troubled bank, Bloomberg writes .
To date, as part of the deal to merge Credit Suisse with another Swiss bank UBS, the government of the confederation has allocated 109 billion francs, and another 100 billion francs have been reserved as guarantees by the Swiss National Bank. The regulator is ready to provide these funds to UBS to repay Credit Suisse's troubled assets. The agency notes that 209 billion Swiss francs is approximately 25% of the republic's annual GDP and higher than all EU defense spending in 2021.
It is noteworthy that the amount is more than three times more than the package of aid from the National Bank of Switzerland, provided to UBS during the global financial crisis in 2008, when the authorities allocated 60 billion francs to support one of the largest banks in the world. Experts note that by their actions the regulator and the authorities of the republic undermined their credibility – specifically to save the bank, they changed the legislation that would prohibit such transactions without the approval of the shareholders of the problem bank. Moreover, the deal turns out to be extremely beneficial for the UBS bank, which receives a relatively attractive asset for next to nothing, and the state takes care of all the problems of the bank.
“The decision of the authorities will help UBS to make huge profits if the situation returns to normal. They got Credit Suisse for free and the government is covering the losses,” says Christoph Rechsteiner, partner at the Zurich tax consultancy MME.
The decision of the Swiss authorities did not find understanding among many Swiss – some even held a protest against the merger of UBS and Credit Suisse. After the announcement of the decision to rescue Credit Suisse, about 200 people went to the central office of the bank in Zurich and demanded that the decision be canceled. They chanted "Eat the rich!" — and threw eggs at the bank office. The position of the protesters boils down to the fact that for "too big and rich, the law is not written, because it can be changed for themselves."
At the same time, from an economic point of view, experts call the decision of the Swiss authorities more correct, since the possible consequences of the fall of the bank could be even more catastrophic than the cost of saving it. Moreover, the authorities made a number of tough decisions, for example, they refused to pay the bank's subordinated debts, which caused bondholders to lose about $19 billion. However, other decisions of the regulator and the government do not find understanding among the general public and some experts: still receives huge bonuses for his work, and no layoffs are planned within the financial conglomerate.
The problems of Credit Suisse began in the middle of last year, the not very successful business model of investment units, coupled with the outflow of premium and not only customers, sharply undermined the financial stability of the bank, which they began to publicly talk about in early autumn 2022. Since then, the situation has only worsened, and the bank’s shares have collapsed 14 times in six months: from $14 at the beginning of 2023 to less than $1 at the end of March.