Credit Suisse Group AG would not have survived another business day without the Swiss government stepping in and bailing it out, Finance Minister Keller-Sutter said.
“Credit Suisse would not have survived Monday,” he said in an interview with the Swiss newspaper Neue Zürcher Zeitung (NZZ). There would have been a great deal of turmoil and it would have collapsed,” he said.
Finance Minister Keller-Sutter announces UBS’s deal to buy Credit Suisse
Photographer: Pascal Mora/Bloomberg
A chaotic failure of Credit Suisse could have cost twice as much as Switzerland’s GDP, Kellersutter said, citing expert estimates. He also said broadly, “A global financial crisis was also envisioned. The failure of Credit Suisse would have plunged other banks into the bottomless darkness.”
The Swiss government-brokered takeover of Credit Suisse by UBS Group has been criticized for completely ignoring investor rights and imposing huge costs on Swiss taxpayers in the next crisis. . But Kellersutter said other options would have been even worse.
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“All other options were more risky for Switzerland,” he said, adding that a temporary nationalization of Credit Suisse would have lasted much longer than desired. “It shows that it can take years, even decades, for a country to dump all of its bank stakes.”
The method of orderly arrangement was also ruled out. In addition to the potential damage, it would have “became the first example of a government liquidating a bank important to the global system. It was clear that this was not the time to be experimenting.” said.
Kellersutter rejected the idea that the UBS takeover was in fact a government bailout, saying “there is no money going to the banks from the federal government.” But he conceded that the deposit guarantee is like an insurance policy and provides “indirect government support.”
He also denied the theory that the United States pressured the Swiss government to bail out Credit Suisse, saying, “U.S. Treasury Secretary Yellen called me and told me that I absolutely had to make sure that UBS bought Credit Suisse. not,” he said.
“However, it was clear to everyone, including us, that the restructuring or liquidation of Credit Suisse would have wreaked havoc on financial markets internationally.”
Original title:Credit Suisse Wouldn’t Have Lasted Another Day, Minister Says(excerpt)
