The Swiss finance minister, who survived the crisis at Credit Suisse last weekend, said he had formed some opinions about the rules to stop large banks following the financial crisis of 2008 — namely , they are not working.
“Personally I have come to the conclusion…that a globally active systemically important bank cannot simply be broken up according to a ‘too big to fail’ plan,” Karin Keller-Sutter told the Zurich newspaper The New Zurich Times (NZZ) in a interviews published on Saturday. “Legally it will be possible. In practice, however, the economic damage is enormous. “
Citing expert estimates, he said the impact of a bad bankruptcy could be as much as double the output of the Swiss economy.
Keller-Sutter sat at the center of emergency negotiations last weekend, when Swiss authorities considering the nationalization of Credit Suisse after the bank rejected a takeover offer from UBS for about $1 billion
UBS at the end AGREES to pay more than $3 billion for Credit Suisse in a deal brokered by the government, helping to avert a crisis of confidence with global consequences. Not that everyone is happy: About $17 billion in risky Credit Suisse AT1 bonds suddenly become worthless.
“This is the only possible solution,” he said on Sunday, describing the agreement as necessary to stabilize Swiss and international finances. markets. But as he told NZZ, last weekend “it was clearly not the time for experiments. The crash of Credit Suisse would have dragged other banks into the abyss.”
A smooth blow could cause “enormous” damage to Switzerland, which risks becoming “the first country to shut down an important bank in the world,” he told NZZ in his first interview since the crisis. (Bloomberg and the Financial Times reported in an interview earlier Saturday.)
Credit Suisse would not have survived another day of trading, he told NZZ. Swiss authorities are racing to finalize a deal before Asian markets open on Monday. “Without a solution, CS payment transactions in Switzerland could be disrupted, maybe even collapsed,” he said.
And, he added, “it is clear to everyone-including ourselves-that a reorganization or liquidation of CS will cause major international upheaval in the financial markets.”
But he rejected the idea that the US forced Switzerland into the agreement, saying: “It’s not like the Secretary of the Treasury of the US, Janet Yellen, said to me on the phone: You have to make sure that UBS buys CS. “