Special report
Details of the UBS and Credit Suisse merger have been slow to filter into the press, with suggestions that global layoffs could hit the tens of thousands.
the world-renowned IMD World Competitiveness Center. “At the end of 2022, we think we finally see the light at the end of the tunnel, and then, boom, the Silicon Valley Bank (SVB) hit the switch, and then Credit Suisse is gone.” With an already nervous market, when the run on SVB began on 10 March, it triggered investors worldwide to dig deeper into the problems affecting the solvency of banks – and that’s when Credit Suisse’s tottering reputation could no longer sustain itself. By 19 March, the bank had been acquired by UBS, its erstwhile cross-Zurich rival. Bris does attempt to defend the bank, noting that while it “had done the wrong things in the past,” it was critically “caught in the wrong time”. Unlike the case with SVB – and even the 2008 banking crisis – Bris says there was nothing particularly intrinsic to Credit Suisse that caused its demise. Rather, problems were accelerated by external issues, the most significant being SVB’s own disintegration. For Bris, one of the more salient factors here is the spread of social media, which ultimately helped Credit Suisse crumble before much could be done to save it. “In 2008,” he says, “we started having news about Lehman Brothers in 2007, but [it only] went bankrupt in September 2008. It took a long time for the crisis to cook up and so on. In the case of Credit Suisse, it was one weekend.”
Taking the long view
Few people have more authority to speak on the differences between the collapse of Credit Suisse and the 2008 banking crisis than Marcel Rohner. He is perhaps most well-known as the man thrust into the role of CEO at UBS, back in 2007. A mere 16 months later, Lehman Brothers collapsed, leading to the near- freezing of interbank loans and UBS, as the largest asset manager, would find itself without liquidity and a mountain of illiquid securities. The bank was forced to take a deal orchestrated by the Swiss National Bank (SNB) and the Federal Banking Commission,
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effectively pumping $60bn into UBS directly from the state. Rohner stepped down four months later in 2009, going on to sit on, and chair, various other company boards, before being appointed as chairman of the Swiss Bankers Association (SBA) in 2021. As a trade association dating back to 1912, the SBA represents Swiss banks to the national government and other states, with its main goal being to promote the best possible framework conditions for all the actors in the Swiss financial centre. The group lobbies banks to engage in a form of self-regulation, in conjunction with the Swiss Financial Market Supervisory Authority (FINMA), where firms draw up a code of conduct in partnership with (and with oversight from) the FINMA. To put it differently, it’s safe to say that Rohner is familiar with the highs and lows of the banking sector – and means he’s able to take the long view of what went wrong with Credit Suisse. “The trigger of the crisis in 2008 was, of course, quite different from the one now in spring 2023,” he argues. “[But] what is even more relevant is that the regulatory environment was quite different in 2008. The numerous and diverse players in the Swiss banking centre have, on the whole, successfully undergone a fundamental regulatory transformation in recent years, and have learned the right lessons from the financial crisis. For example, nowadays banks have significantly larger liquidity and capital buffers.”
Regulations rule Both experts are clear, however, that the collapse of Credit Suisse shows how these same regulations, put in place in the aftermath of the 2008 fiasco, are working as intended. The very fact that just a single bank – albeit an important one – got into difficulties only works to confirm this. Bris compares the runs on Credit Suisse and SVB to prove his point, specifically paying credit to Basel III, the regulations implemented after the 2008 crash that improved the ability of banks
Marcel Rohner, chairman, Swiss Bankers Association.
Arturo Bris, professor of finance, International Institute for Management Development.
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