Swiss parliament meets amid criticism of UBS-Credit Suisse deal

Swiss politicians voiced their discontent over the takeover of Credit Suisse, criticising the government’s use of emergency measures and blaming the bank’s management.

“Credit Suisse’s leadership has to take responsibility for its actions, that’s not only dictated by fairness,” Hansjoerg Knecht, a member of the Swiss People’s Party, told the upper house of parliament during a special session in Bern. “Tens of thousands of employees worry for their jobs.”

The extraordinary parliamentary meeting, scheduled for three days starting Tuesday, is the latest battleground for the government to justify why it brokered Credit Suisse’s takeover by UBS. The move – described by president Alain Berset as the best option to re-establish confidence in markets – created a banking giant whose assets are more than twice the size of the Swiss economy.

Parliament, just like shareholders, did not get a say on the deal, yet the March 19th agreement was signed off by a small group of senior MPs – the so-called financial delegation. That means the takeover cannot be derailed by the legislative.

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One of the members of that delegation – Peter Hegglin of the Center Alliance – highlighted that there had been no other option, though he regretted the situation. “The decision wasn’t easy for me. The banking industry was warned by the 2008 crisis – unfortunately Credit Suisse’s leadership didn’t learn from the crisis. Like in a dramatic tragedy the managers destroyed values and made themselves rich in the process.”

Earlier the government’s intervention was defended by Mr Berset, who said ministers needed to stop the collapse of the bank – which would have taken place within a day or two without the March rescue – and stop fallout beyond Switzerland itself. “The Federal Council was obliged to intervene to maintain stability both in Switzerland and internationally and to protect the economy,” Mr Berset said in the Swiss capital. “A failure of Credit Suisse would have had disastrous consequences.”

Lawmakers are trying to push the government to overhaul too-big-to-fail rules for systemically relevant banks and pursue legal action against management at Credit Suisse. It is unclear at this point which executives might be targeted.

Given the merger has been met with little public enthusiasm and it is an election year, parliament is also trying to curtail government powers in the future: it is attempting to block the use of emergency measures to push through deals like this.

This week is not the last time the topic will be discussed in parliament. An oversight committee has scheduled hearings of the heads of Swiss National Bank, banking watchdog Finma and the finance and justice ministers in May.

Lawmakers are also threatening to initiate a parliamentary inquiry which would have subpoena powers to summon witnesses. A decision on whether a body for this is installed is expected by early May. – Bloomberg