Credit Suisse debacle: the self-image of a stable Switzerland is faltering

The fact that the traditional bank Credit Suisse quickly became a hopeless case reminds many in Switzerland of the Swissair collapse in 2001. It’s not just top managers who have to listen to harsh criticism.

The elephant wedding of the country’s two largest banks is anything but a celebration in Switzerland. For the “Tagesanzeiger” from Zurich, the takeover of the crisis bank Credit Suisse by UBS is even a “historic scandal”: The Swiss state, the financial market supervisory authority and the SNB have let themselves be ripped off by UBS, the newspaper comments. The conclusion of Balthasar Glättli, leader of the Green Party, at a press conference in the morning was very similar: “If things go well, UBS has gotten a bargain – if things go badly, the taxpayers foot the bill.”

Scandals, missteps and billions in bonuses

There is not only sharp criticism of the bank merger with state support, which the Swiss Federal President presented yesterday as a “strong solution”. Also targeted are the top managers of Credit Suisse, who pocketed billions in bonus payments over the years and could afford any number of scandals, missteps and lawsuits; also because the state supervisory authorities and politicians – according to the criticism – did not react in time.

“It was organized irresponsibility,” said the co-president of the Social Democrats Mattea Mayer on the SRF broadcaster: “There were gentlemen who had responsibility – but didn’t take it.” For years, according to Mayer, economically liberal politicians have described the bankers as top performers and justified their million-dollar salaries.

“Entire financial sector discredited”

Switzerland is arguing about a bank merger – but in truth there is more at stake: the decline of the historic and once proud traditional bank Credit Suisse reminds many in Switzerland of comparable shocking moments from the past: 2001 – the grounding of Swissair. 2008 – State bailout of UBS, which is now swallowing up the reeling Credit Suisse.

The self-image – and self-confidence – of Switzerland as a banking country has been severely damaged. There is a cultural problem, says Greens MP Gerhard Andrey: “The entire financial sector is discredited. Obviously, the laws and the protestations celebrated by politicians have not brought any improvements to the industry since the financial crisis of 2008.”

Now even more “too big to fail”

The stricter rules for systemically important banks after the 2008/2009 financial crisis would not have helped in the case of Credit Suisse. The Greens are now calling for a parliamentary commission of inquiry. And another concern moves not only fundamental critics of the “greedy financial system”: namely what will happen after the liquidation of the second largest Swiss bank Credit Suisse – when there will only be a giant bank UBS.

“A zombie is gone, but a monster is emerging,” comments the “Neue Zürcher Zeitung”. After all, the takeover of Credit Suisse will make UBS “too big to fail”.