“The industry can handle failure smoothly”

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Sunday’s outlook: Mr. Hirzel, a week ago Credit Suisse was swallowed up by UBS with the active participation of Swiss authorities. How do you rate it all?

Martin Hirzel: The most important thing for us as an industry was that we could work normally this week. Companies did not lose any money, payment processing and currency hedging worked perfectly. On the other hand, the bankruptcy of CS could have disastrous consequences for the Swiss business. In this respect, we are happy and grateful that the responsible authorities and representatives of the major banks have found a solution to avoid the chaos.

Was Swiss industry prepared for what happened?

Swissmem was not involved in the takeover negotiations. However, the industry was very well prepared for a possible bankruptcy of CS. As questions about CS grow, many companies have transferred their cash pools to other banks in the past six months. However, CFOs did their homework much sooner: no major Swiss company trusts just one bank.

Certainly these money transfers to other banks were CS’s ruin.

For an industrial company, there was no alternative to this procedure. The deposit guarantee is also valid only for corporate customers up to CHF 100,000. Therefore, it was inexcusable for a company to stick to CS despite all the risks. This would endanger their own lives.

What does the takeover mean for the Swiss workplace?

We now have less competition in the financial center. This is not good news, especially for export-oriented companies. By receiving offers from both, the industry was able to compare UBS’s offers with CS’s. This is now over and there is a risk of worse conditions for payments, loans and settlement of corporate bonds. In addition, CS was the absolute leader in financing and securing export transactions. But the people in charge at UBS also know this, and so I assume they will continue this business and that the know-how will be preserved.

How important is change for a single SME?

Having two large banks was an advantage over competition abroad. This will be neglected in the future. This is unfortunate, especially at a time when companies are facing many other challenges: Energy costs have risen, there is great geopolitical uncertainty and relations with the EU are still unresolved.

Other countries such as Sweden are also very strong in exports, although they do not have large international banks. Even Germany, the “world champion exporter” with Deutsche Bank, has only one financial institution globally classified as systemically important..

Indeed, it was a privilege for Swiss industry to have two internationally active universal banks. It was part of our good framework. But we will find ways to succeed without CS. I don’t see a problem for small companies anyway, there are enough alternatives for their needs with Raiffeisen, regional and cantonal banks. On the other hand, big companies are already very international and can do business with large American or British banks. You are not dependent on UBS. I see the biggest change in medium-sized exporting companies. Now they will have to get used to the fact that they cannot do all financial transactions in their own village and in their mother tongue.

What are the alternatives?

BNP Paribas, Deutsche Bank, ING etc. These banks have been operating in Switzerland for years, some have German-speaking staff and will now seek to profit from the CS takeover. Some of these banks have already knocked on the door of CFOs of Swiss companies in the past weeks and months.

B Is there a risk of deindustrialization due to the bankruptcy of CS?

No, it definitely won’t. The machinery, electrical and metal industry has more than 325,000 employees and the trend is rising. We are in a very strong position, contributing almost ten percent to the gross domestic product and we can easily cope with the loss of CS. No danger to the Swiss workplace.

Sounds very optimistic.

I spoke with a dozen CFOs from companies of all sizes this week. No one is nervous about the CS takeover. Swiss industry has proven to be resilient in the past. We learned how to deal with the strong Swiss franc and we survived the Corona crisis very well. Therefore, I believe that we will also overcome the consequences of the CS crisis.

There are growing voices in politics demanding that UBS resell CS’ Swiss business so that the space can continue as an independent bank. What do you mean by that?

All alarm bells go off for me when politicians want to tell companies how to do their job. In principle, it is desirable that CS continue to exist in Switzerland. However, I don’t see a way to force UBS to do this. Otherwise, this would have to be negotiated in advance. But I wouldn’t be surprised if UBS concludes that selling certain parts is the best solution. After all, CS’ Swiss business was ultimately profitable and the merger resulted in many iterations.

Is there anything you want to say to the UBS management?

I hope UBS does not take advantage of the current situation to impose worse conditions on the industry. Maintaining CS’ export financing is also extremely important. But there is no reason to stop this thriving business.

Source :Blick

Tim

I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.