Saving Credit Suisse is a good solution but also a threat

The Swiss bank Credit Suisse, which is in deep crisis, has been rescued for now thanks to its main rival bank UBS. This prevented the uncontrolled collapse of this bank. But uniting two banks also carries numerous risks.

Swiss federal President Alain Berset called salvation a very strong “ ” solution. UBS will take the Credit Suisse bank for three billion francs. It is an announcement that could have long-term consequences, Berset said. As for large Swiss banks, but also for the stability of the Swiss financial environment, private individuals, as well as companies that need financial resources from banks, so they need loans.

But this is also important for the stability of the international financial system. A uncontrolled collapse of Credit Suisse would have unpredictable consequences for Switzerland and the international financial world”, the federal president stressed. “We have to do everything to avoid a crisis with broad financial sizes”.

100 billion franc loans

The National Bank of Switzerland (SNB) has supported the unification of two of Switzerland's largest banks, providing them with a 100 billion franc loan to help the bank licidity.

In addition, the Swiss government has given the bank UBS a guarantee worth nine billion francs. The government expressed regret that Credit Suisse bank was unable to escape the difficulties it had fallen into, Swiss Finance Minister Karin Keller-Suter said.

The campaign should bring stability to the market?

Credit Suisse's capture of rival UBS bank is <x0 state choice”, the minister stressed. But any other solution would result in a financial crisis, she adds. A bank's “Delay that is important for the global system would cause major problems for the Swiss national economy, but could cause global crisis”, says Minister Keller-Suter.

Switzerland had to assume its responsibility beyond the borders of the country. The government is convinced that taking Credit Suisse from the UBS will create a basis for greater stability both in Switzerland and internationally,” said Keller-Suter.

Support From Liberals, Criticism From Social Democrats

It's a historic decision. UBS taking over the 167-year-old Credit Suisse tradition. Neue Zürcher Zeitung called the decision “the biggest economic and political recovery in Switzerland since the bank's rescue. UBS in 2008 and the rescue of Swiss national airline Swiss Swiss Swiss Swiss in 2001”.

Therefore, reactions to Swiss policy towards Credit Suisse's rescue action were different. The liberal FDP praised him. Taking in was necessary to remove damages from Switzerland as a financial and economic basis, liberals say.

While co-chairman of Switzerland's Social Democrat Party, Cédric Wermuth, expressed his anger on Twitter, arguing that nothing had changed since the 2008 financial crisis. The entire financial system is the sick and absurd “” and now the state must intervene again to save the bank, he says.

“

Of course we can now complain and say, things have been able to become different in the past years, says economist Thorsten Hens, deputy director of the Institute for Bank and Finance in

University of Cyril. But given the difficulties this bank is in, it is now the best solution, he says.

It is also clear that taking Credit Suisse from UBS to Switzerland creates a new giant bank, a huge bank “which cannot be allowed to bankrupt”. And that means completely new risks for Switzerland, explains economist Hens. There is a large company, Samsung, which essentially determines politics at the end. (Credit Suisse uses the Samsung Paya app for free payments, editor explanation).

You have to be careful, because if you have such a large company, who can save UBS at the end of”, warns Hens. Then there may be only nationalism, because there is no other bank that can eventually get such a huge giant, says the economist at the University of Zurich, Thorsten Hens. / DW