Credit Suisse clients withdrawing their money as the bank headed for collapse likely accounts for the first significant balance sheet contraction in a decade for all banks in Switzerland, a report by the Swiss Bankers Association on Tuesday said, Reuters reported. In Switzerland, the balance sheet of banks fell 6.9% to 3,339.7 billion Swiss francs ($3.76 trillion) in 2022, said the Banking Barometer, an annual report on banking industry trends. "The downturn among the big banks was especially large and probably driven mainly by shifts in customer funds at Credit Suisse," the report said.
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Switzerland was urged to prepare properly for the failure of a big bank on Friday by a group of experts in the wake of the collapse of Credit Suisse, but their report to government skirted radical reform some say is needed, Reuters reported. UBS Group emerged as Switzerland’s single largest bank earlier this year after the government hastily arranged and partly bankrolled its takeover of stricken Credit Suisse to prevent that bank's collapse.
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Switzerland's Competition Commission is looking into UBS's takeover of Credit Suisse, the authority said on Monday, Reuters reported. In March, the Swiss government, central bank and financial regulator rushed through a rescue deal for Credit Suisse, resulting in the country's two largest banks merging. "We confirm that the Swiss Competition Commission is looking at the takeover of CS by UBS and will send FINMA her results probably by the end of September," the Commission's vice-director told Reuters.
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Switzerland's financial regulator looked into the risk of money laundering at 30 banks this spring, FINMA said in an analysis published on Thursday, after identifying shortcomings in the area, Reuters reported. "In particular, an adequate definition of the money laundering risk tolerance, which forms the limiting framework of a robust risk analysis through set limits, was lacking in some cases," FINMA said.
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Global regulators spent more than a decade trying to ensure that a large bank could fail without any government support. Despite this year’s bank failures, they are still working on it, the Wall Street Journal reported. Global regulators are reviewing the March failures, including Credit Suisse’s collapse and Swiss officials’ decision to push UBS to acquire its rival in a deal with billions of public money, people familiar with the probe said.
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UBS said that it would no longer rely on Swiss government assistance tied to its emergency takeover of Credit Suisse in March, the Wall Street Journal reported. The Swiss bank said that it terminated a roughly $10 billion government backstop that had limited its potential losses on some Credit Suisse assets. UBS also exited emergency liquidity lines the country’s central bank had provided to keep Credit Suisse afloat. UBS bought Credit Suisse after the latter came close to collapsing as customers pulled deposits.
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The number of company insolvencies in Switzerland rose 22% in the first six months of the year compared to the same period in 2021, SwissInfo.com. Some 581 construction firms went bankrupt between January and the end of June, out of 2,822 companies in all sectors, according to research group Dunn & Bradstreet. The financial and service sector industries saw one of the largest percentage rises in bankruptcies with a 31% increase in businesses going bust. Some 30% more hotels and restaurants also went out of business.
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A committee that reviews disputes in the credit default swaps (CDS) market said on Monday that UBS is the sole successor to Credit Suisse Group following the merger of the two banks, Reuters reported. This means that Credit Suisse will no longer be the reference entity for its outstanding CDS, which are a type of insurance against holding risky debt. Instead, UBS will become the new reference entity, with the effective date being June 12, when the merger was completed. An investor noted that the decision was widely expected and therefore should not have any major market impact.
FTX filed a lawsuit on Wednesday against former managers of a Swiss business the bankrupt cryptocurrency exchange had acquired, looking to claw back at least $323 million to repay creditors and customers, WSJ Pro Bankruptcy reported. The lawsuit filed in the U.S.
The Swiss National Bank raised its policy interest rate by 25 basis points on Thursday as the central bank pressed ahead with its campaign to dampen stubborn inflation and signalled that more tightening was likely to come, Reuters reported. Chairman Thomas Jordan pointed to rising inflationary pressures and the danger of price increases becoming entrenched as the SNB hiked Swiss rates for the fifth time in succession. Although Swiss inflation ebbed to 2.2% in May from 2.6% in April, there was still more work to be done to tackle rising prices, Jordan told reporters.
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