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Is the UBS takeover of Credit Suisse good for the Swiss economy?

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20 Mar, 2023 Updated Mon 20 Mar 2023 09:49 CEST
Is the UBS takeover of Credit Suisse good for the Swiss economy?
For Credit Suisse chairman Axel Lehmann the takeover of his bank is 'sad.' Photo by Fabrice COFFRINI / AFP

By far the most surprising news of the weekend in Switzerland has been the takeover of Credit Suisse by its larger — and more financially stable — rival, UBS. But what does this mean for the country — and your bank accounts?


The historic takeover sent shockwaves through global financial markets, including, of course, Switzerland, which is no stranger to banking scandals, but where takeovers of such massive scale are extremely rare. 

While Credit Suisse — which, until Sunday, was Switzerland’s second-largest bank — faced its demise after a turbulent week on the stock market that ended with a 50-billion-franc lifeline from the Swiss central bank, the Federal Council convened for hastily organised crisis talks  during the weekend to figure out how to save the day — and the country’s economy. 

After the UBS announced on Sunday its readiness to take over Credit Suisse, the government said it “welcomes this move as an important contribution to financial market stability.”

To ensure a smooth transition period, Swiss National Bank will release up to 100 billion francs “to reduce the burden on the Swiss economy,” federal authorities said.

They added that  they are  "taking this measure in order to protect financial stability and the Swiss economy. 

READ MORE: Switzerland's crisis-hit Credit Suisse bank faces crucial weekend


Why did the government approve the takeover?

Its primary goal, the Federal Council said, is to “minimise the risk" that Credit Suisse’s failure would unleash on Switzerland’s economy.

By approving the takeover and providing the interim financial help, the Federal Council "is reaffirming its readiness to take the necessary measures to protect the stability of the Swiss financial centre."

If you are a Credit Suisse customer, what will happen to your accounts?

They too will be ‘taken over’ by UBS.

You will receive a letter from the bank informing you how and when this will happen, along with other details.

Your money will be transferred automatically after you sign the necessary documents.

However, if you prefer to transfer your assets to another bank, you are free to do so as well.

UBS will provide information on how to do this.

Will the money remain safe?

As The Local recently reported, Swiss banks are “very safe,” in international comparison, both in terms of capital and liquidity, according to Robert Reinecke, spokesperson for Swiss Banking Association (SBA).

“They have a very robust capital base even in stress scenarios,” he added.

Assets deposited in either Swiss banks or foreign financial institutions that operate a branch in Switzerland must be licensed, regulated, and supervised  by the Swiss Financial Market Supervisory Authority FINMA.

As an additional safety measure, "Swiss law demands capital adequacy standards” to ensure solvency, according to SBA.

You can read more about how your money is protected in this article:

Reader question: Will Credit Suisse crisis impact my savings in Switzerland?


What reaction did the takeover elicit in Switzerland?

In terms of share prices Credit Suisse shares fell 63.7 percent below UBS takeover price on Monday whilst UBS shares fell 8.77 percent.

It depends on who you ask.

For the Swiss president Alain Berset, “this is the best solution not only for Switzerland, but for the financial stability on global scale as well.”

"Its fate is therefore not only decisive for Switzerland, for our companies, for private clients, for its own employees, but also for the stability of the entire financial system," Berset said in unveiling the deal.

Finance Minister Karin Keller-Sutter said the bankruptcy of Credit Suisse could have caused "irreparable economic turmoil".

"For this reason, Switzerland has to take responsibility beyond its own borders," she said.

"The UBS takeover of Credit Suisse has laid the foundation for greater stability both in Switzerland and internationally."

But for Axel Lehmann, chairman of Credit Suisse’s board of directors, the demise of the bank, which has been a huge part of Switzerland’s financial landscape since 1856, “is sad,” he said in an interview.

"It is sad not only for the bank and its employees, but also for Switzerland and the world,” he added.

UBS chairman Colm Kelleher said the merger boosted his bank's position as a global wealth management leader with more than $5 trillion in total invested assets.

"It will also reinforce UBS's position as the leading universal bank in Switzerland and further extend our position as the most important Swiss global bank," Kelleher said


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