“A dramatic tragedy”: Swiss parliament split on UBS takeover of Credit Suisse
Swiss authorities defended the state-brokered merger of the country’s two largest banks, UBS and Credit Suisse, in an emergency parliamentary session called to scrutinise the decision.
The Swiss President, Alain Berset, argued “the Federal Council was obliged to intervene to maintain stability both in Switzerland and internationally and to protect the economy.”
“A failure of Credit Suisse would have had disastrous consequences,” he said.
The emergency session, only the third in over twenty years, cannot annul the deal as it has already been confirmed by a small group of senior MPs.
One of those MPs, Peter Hegglin, also stressed that there was no other option to the takeover, although he remained critical of Credit Suisse’s leadership team.
“The decision wasn’t easy for me,” he said. “The banking industry was warned by the 2008 crisis — unfortunately, Credit Suisse’s leadership didn’t learn from the crisis,” he said.
“Like in a dramatic tragedy, the managers destroyed values and made themselves rich in the process,” Hegglin continued.
Other parliamentarians hit out at the takeover. “Credit Suisse’s leadership has to take responsibility for its actions, that’s not only dictated by fairness,” Hansjoerg Knecht said.
“Tens of thousands of employees worry for their jobs,” he continued.
In March, UBS acquired Credit Suisse for a discount $3.25bn in an attempt to preserve the global financial system from a wider meltdown. In effect the deal is backstopped by the Swiss government, which has assured liquidity assistance for the newly merged entity.
While the parliamentarians cannot overturn the deal, they can signal their discontent and raise questions about the likely impact the takeover will have on the Swiss economy.
The emergency session is expected to go on for a few days and lawmakers are expected to raise concerns about possible job cuts and the impact on the economy of having one bank which is more than twice the size of the entire Swiss economy.
The Swiss Bank Employees’ Association wrote a letter to the Swiss parliament earlier today demanding that any job cuts be frozen. Reports last month suggested that UBS would cut up to a third of the bank’s workforce.
The deal has been deeply unpopular with shareholders, politicians and the broader public. The country’s two largest political parties have already both expressed discontent with the takeover in different ways.