Swiss president says Credit Suisse rescue averted catastrophe

Swiss President Alain Berset told lawmakers on Tuesday that letting banking giant Credit Suisse collapse would have triggered a catastrophe, as he defended theBerset addressed an extraordinary session of parliament that was called to debate the controversial Mar 19 deal that his government arranged in double-quick time behind closed doors.

The three-day session at the Federal Assembly in Bern was called after lawmakers found themselves before a fait accompli. Rather than bankruptcy, nationalisation or attempting to restructure a bank in which confidence was shot, the takeover was considered the most likely option to restore market confidence, the president told the 46-member Council of States, the upper house of parliament.

But that failed to restore investor confidence, and fearing a bloodbath when the markets reopened on Mar 20, the government, the SNB and the FINMA financial regulator strongarmed UBS into a US$3.25-billion takeover the day before. The National Council wants to examine the guarantees granted to prop up the rescue, the possibility of legal action against Credit Suisse's governing bodies and the regulation of banks considered"too big to fail".The government has calmed some of the anger in parliament by stripping Credit Suisse's executive board of their 2022 and 2023 bonuses.

Source: Financial Digest (financialdigest.net)

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