Swiss politicians oppose massive bank deal

Giant Credit Suisse deal triggers political backlash in Switzerland
Image: Reuters

The two major political parties in Switzerland have expressed vehement opposition to UBS’s takeover of Credit Suisse. They argue that the government’s multibillion-dollar support for the merger presents grave risks to the country.

Swiss authorities said on Sunday that UBS would purchase Credit Suisse. It is a merger meant to combat a rising crisis of confidence in global financial institutions.

Complaints were expressed by organisations on all sides of the political spectrum over the enormous quantities of money provided by the central bank’s liquidity injection and government assistance.

Around one-third of Switzerland’s gross domestic product, or 280 billion Swiss francs, is at risk for Credit Suisse and UBS. The support includes $250 billion in reimbursable cash, and the government will absorb losses of up to $9.5 billion.

In a parliamentary discussion, the leader of the Swiss Social Democrats (SP), Roger Nordmann, described the assistance package as a “huge threat.”

“The new UBS is also a huge threat, It will have more than 1,500 billion francs in assets. It is just too enormous for Switzerland.”

The Swiss Social Democrats are the second biggest party in the nation, with two ministers in the cabinet.

“A wake up call to the Swiss government”

The criticism is unlikely to topple the deal, it will put the pressure on the cabinet, which operates by consensus.

Nordmann voiced concern about job losses and placed the blame for Credit Suisse’s collapse completely on the bank’s leadership.

He said that the occurrence is detrimental to Switzerland’s image. “This should act as a wake-up call to the Swiss government on the perils of having too huge banking firms. For the new UBS, I have grave reservations.”

However, the conservative Swiss People’s Party (SVP) raised worry over Credit Suisse’s leadership’s multibillion-dollar attempts to rectify what it labeled “rip offs” and “mistakes.”

Credit Suisse informed staff in a memo that they will get their full bonuses after the merger announcement on Sunday.

“Everything must be done to ensure… the Swiss people are not harmed during the rescue,” the party urged in a statement.

The biggest Swiss parliamentary party, which also holds two positions in the nation’s seven-member cabinet, has established stringent prerequisites for a shift in power.

If UBS is not reorganized soon, it will become the next worrying instance, warned the senior vice president.

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