Just last Monday (20th), the world-renowned large investment bank Credit Suisse (hereinafter referred to as Credit Suisse), under the active consultation of the local government, the Swiss Bank (UBS, hereinafter referred to as UBS) officially offered 3 billion UBS Lang (approximately US$3.25 billion) acquired Credit Suisse in an all-stock transaction .
According to "Businesstoday" yesterday, Swiss Finance Minister Karin Keller-Sutter said in an interview with local media recently that the Swiss government was forced to intervene to save Credit Suisse from its imminent collapse.
The bank is in deep trouble and investor confidence has plummeted to the point where it would not have survived Monday's trading without intervention.
Without a solution, Swiss payments transactions with Credit Suisse will be severely disrupted and may even collapse.
Karin Keller further warned that the impact of disorderly bankruptcies could be as much as twice the economic output of Switzerland, triggering a global financial crisis . Although some people criticized UBS's rapid acquisition of Credit Suisse, disregarding the rights of original investors and fearing a heavy burden on Swiss taxpayers. But Keller-Sutter insists it's the best move right now.
All other options are riskier for the country. …We also ruled out an orderly liquidation, as the losses would be considerable. Would make Switzerland the first country to liquidate a globally systemically important bank, and now is clearly not the right time.
Additionally, Karin Keller denies that rescue is the same as bailout. She said no money had flowed from the federal government to Credit Suisse; but she acknowledged that the deposit guarantee, much like an insurance policy, was an "indirect state support".
Credit Suisse's CHF16 billion AT1 bond canceled in full
However, for the original Credit Suisse investors, there is a loss that needs to be noted. The Swiss financial regulator Finma said that Credit Suisse's Tier 1 capital (AT1) bonds worth about 16 billion Swiss francs will be written down to zero to increase the value of the credit suisse. core capital of the line. Investors who hold related bonds fear losing their money, according to one banker:
Such a decision could lead to a "nightmare" for the European bond market, especially given that bondholders suffer more than Credit Suisse shareholders.
