Credit Suisse disaster: profits privatized, losses transferred

There has been a lot of criticism of the takeover of Credit Suisse by UBS in the otherwise proud banking country of Switzerland. But those responsible dodge the question of responsibility for the Credit Suisse disaster.

A man and a woman are hiking in the mountains and want to take a break. But the crooked bench on the side of the path is not very inviting. “But it looks shaky,” says the woman. “Seems to be a Swiss bank,” says the man. And both look pretty unhappy in this caricature, which the Swiss newspaper “Blick” presents as a find online – headline: “The Internet is laughing about the CS quake”.

More and more investors fled

CS stands for Credit Suisse – the historic Swiss bank, which will soon be history itself because it has become too shaky. Because too much has gone wrong, and has been for a long time. Poor risk management, scandals, lawsuits: More and more investors and customers looked at the increasingly shaky Swiss bank like the unfortunate hikers in the cartoon – and fled.

When collapse threatened in the past few days and a catastrophic escalation with possible global consequences, the Swiss government and authorities pushed for the takeover of CS by UBS – and support the forced marriage of the big banks with an extensive package of state aid and guarantees.

Taxpayers are right to be angry

The risk is therefore largely borne by Swiss taxpayers. And now they’re really angry. Because what about the responsible top managers at Credit Suisse? According to Zurich-based “Tagesanzeiger”, they have received 32 billion francs in bonuses since 2013, while the bank made a loss of 3.2 billion over the same period.

Rarely has it become so obvious how profits are privatized and losses transferred to the state under the cloak of a business-friendly and liberal policy. On Sunday evening, the Swiss finance minister publicly regretted that Credit Suisse was not able to overcome the difficulties on its own.

No conclusive answers so far

This is remarkable in that she has not yet regretted that the Swiss supervisory authorities had stood by and watched the collapse of Credit Suisse for so long. After all, how could it happen that a bank that, according to the financial market supervisory authority, allegedly fulfilled the strict Swiss rules for equity capital and liquidity, is now dependent on this enormous rescue operation?

So far, there are no answers to such questions in Switzerland. But the questions keep getting louder. The Credit Suisse disaster is not just the story of a shaky Swiss bank. Its decline has also shaken Switzerland’s traditional self-image as an economically liberal guarantor of stability and security.