Green light for recovery Credit Suisse. The Swiss Senate approved 109 million Swiss Francs this Tuesday. (110,553 million euros) form the government-backed loan package to bail out the bank. With 29 votes to, six to and seven abstentions, the Senate approved its third extraordinary session in two decades, during which the Government answered a series of questions about the integration process with UBS and its possible consequences. The Country’s Executive had promised a few days ago that he would submit a detailed report on the operation to the Chamber within a period of twelve months.
The collapse of Credit Suisse in mid-March forced Swiss authorities to take action on this issue to prevent the banking crisis from escalating. Thus, after intense negotiations, where the purchase price started at €1,000 million, UBS, one of the country’s largest banks, agreed to acquire the asset for $3,250 million. The deal includes €110,553 million offered by the Swiss National Bank and a change in legislation to speed up the operation as much as possible. This legislative change allowed the acquisition to be completed without a shareholder vote, and this decision was met with outrage. “I feel that this institution has deceived me and the government is not communicating well,” one of Credit Suisse’s shareholders said at its last meeting last week.
Parliament also had no power to block the deal.although it has the power to impose conditions on how the proposed liquidity limit should be used, as this is urgently processed through the Parliamentary Finance delegation. For example, the Green Party demanded that environmental sustainability criteria be included in the agreement. In his speech to the Upper House, Interior Minister Alain Berset argued that the bailout was necessary “to maintain stability both in Switzerland and internationally”.
Berset made sure that Credit Suisse did not disappear overnight. referring to the long list of scandals the bank has been involved in for decades. According to Berset, the asset had been “worn out” by its rulers over the years. The Swiss Parliament will review the government’s actions regarding the Credit Suisse bailout for three days, starting today.
A bankruptcy with “catastrophic consequences”
Thus ends one of the most turbulent times for the Swiss banking sector. Last week, Axel Lehmann, president of Credit Suisse, said: apologized to shareholders, claiming “there are only two options, merger or bankruptcy”, although he did not receive any sympathy from those present. Some of the most outraged are the holders of AT1 bonds, or ‘CoCos’, which are now worthless and valued at CHF 16,000 million. Hours before the shareholders’ meeting, bondholders announced that they had hired the “world’s most feared” law firm Quinn Emanuel to represent them in a potential lawsuit to recover damages from the merger.
Swiss officials believe the outcome would have been much worse had it not been bought by UBS. “The bankruptcy of Credit Suisse would have had disastrous consequences,” Berset said before the Upper House. Its collapse caused losses on the stock exchanges of all European banking institutions, including the Spanish. 24,000 million losers in just four sessions. Markets also feared a decline for Deutsche Bank, which tumbled more than 13% in a day marked by a 17% rise in non-payment insurance.