Who or what was primarily responsible for the collapse of CS? The management and the Board of Directors. CS had been poorly run for years. But the authorities must also take a good look at themselves. They had known since October 2022 that the bank was in difficulty, yet it still took a long time in March to put together a rescue plan. It all seemed a bit off the cuff, unlike the bailout of UBS. This surprised me. We still don’t know enough to pass verdict. A parliamentary inquiry committee has been set up to look into the takeover. However, the bank itself still has a part to play. It should be proactive in producing a But after the UBS bailout, parliament’s too-big-to-fail law was meant to prevent the government and taxpayers from having to take so much financial risk again. Is the fall of Credit Suisse a rude awakening for lawmakers? As a historian, I am not too surprised about what happened. In a crisis, you need the mechanisms to be very simple. Not only was the too-big-to-fail law too complicated, it was also untested and a little naive. You have to remember that foreign authorities are always involved and have their own responses. It can take a while before they all agree. What can Berne still do, if anything, in the face of the global financial markets? I would say that Berne can – and must – still do a lot to keep the banking sector on an even keel. It did a good job with UBS in 2008. The bank was partially nationalised for a time, while the federal government even ended up earning something from the deal. UBS also overhauled its risk culture. In the case of Credit Suisse, Berne believed a merger was the safer option. Time till tell whether it was the right one. 1991 1997 2008 Collapse of a regional bank Regional bank, the Spar- und Leihkasse Thun (canton of Berne), goes into liquidation following the bursting of the property bubble. News of Switzerland’s first-ever bank run goes around the world. Over 220 million Swiss francs worth of private and corporate assets are lost. Merger to create UBS Two of Switzerland’s banking giants, Union Bank of Switzerland and Swiss Bank Corporation, merge to create the country’s biggest bank UBS. The new company expands more into international finance, an area in which it wants to become a world leader. State bailout of UBS Following the collapse of US bank Lehman Brothers, UBS comes unstuck in the ensuing financial crisis. The federal government and the Swiss National Bank (SNB) hand the big bank a 60-billion-franc lifeline. The bailout succeeds without taxpayers taking a hit. are no longer as shocking as they used to be. Since the 1990s, the vulnerabilities of the highly globalised and liberalised banking system have been in evidence all over the world. Repeated state intervention has become the norm. Indeed, there is no other option, because the alternative would be global financial meltdown. Other countries do not want Switzerland to be a source of contagion for the entire banking system. Tobias Straumann, 57, is Professor of Modern History and Economic History at the University of Zurich. His research focuses on financial and monetary history, among other things. Straumann is particularly interested in the interplay between economic crises, institutions, and politics. “We overstate the economic importance of the financial centre.” Photos: Keystone Swiss Review / August 2023 / No.4
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