Even if a liquidation of Credit Suisse would have been possible from a legal point of view according to the principle “too big to fail”, it was “clearly not the time to experiment”, says Karin Keller-Sutter in an interview broadcast on Saturday by the Neue Zuercher Zeitung. “In practice, the economic damage […] would be considerable.
The Federal Councilor also asserts that no pressure was exerted on Switzerland during the negotiations which led to the takeover of Credit Suisse by UBS. “No one pushed us in one direction.”
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As for the separation of the Swiss entity of Credit Suisse from the rest of the group and its maintenance as an independent bank, as proposed by its party, the PLR Saint-Galloise rejects the idea. “To jeopardize the negotiated recovery with new conditions and to alter it at this stage would be very risky, with all the consequences for the Swiss economy and the international financial markets”, she adds. “It’s not pretty – the Federal Council also had to go through this – but it’s the reality”.
First discussions on March 15
Karin Keller-Sutter also brushes off criticism that regulators have been onlookers in the Credit Suisse debacle for too long. The bank “has always complied with regulatory capital and liquidity requirements,” recalls the minister. She says she was not content to blindly rely on the data, but informed the entire Federal Council at the beginning of February of the emergency scenarios.
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“The first discussions between the authorities and the banks took place on Wednesday March 15. It was then clear that a merger between Credit Suisse and UBS would be the best solution, she continues, stressing that other scenarios had not yet been ruled out. Even the decision in principle to nationalize Credit Suisse had been prepared in the form of an emergency order”.
Best of variants
The Minister of Finance says she is convinced that the takeover of Credit Suisse by UBS, with the guarantees of the Confederation, is the best variant. “All the other options were, in our opinion, more risky for the State, the taxpayer, the Swiss financial center and the international markets”. Even if UBS “was certainly not in a weak position”, it did not dictate its conditions, she assures.
As for the anger of the population in the face of a market economy in which we help the “big ones”, the Saint-Galloise claims to understand it. “I, too, have a hard time accepting it,” especially when mismanagement led to such a situation. But such errors cannot be eliminated, she adds. “I fear that the dilemma is not easy to resolve.”
Curb spending
Despite the rescue of Credit Suisse, it still intends to curb the growth of federal spending. “Some areas like the railway infrastructure fund or unemployment insurance have a good cushion. These sectors will be targeted first to balance the budget,” she said. She also notes a disproportionate increase in expenditure in the field of social welfare. “We will also have to tackle this problem”.
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In the immediate future, 2 to 3 billion francs must be “cleared” in the accounts of the Confederation, adds the federal councilor PLR. “I’m hopeful that we can meet the debt brake next year.”
