Early warning system is needed now

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Ueli Maurer (72), in his farewell interview to SRF television in December 2022, was probably one of the last and more deadly wrong decisions of the then finance minister: “You have to leave them alone for a year or two,” he said. Credit Suisse is meant. We all know how it would turn out if the CS bosses were allowed to hang around for as long as Maurer wanted. The soup then had to be spooned out by her successor, Karin Keller-Sutter (59), in a night and fog campaign.

For too long, CS bosses have been able to recite the mantra about thick capital base and adequate liquidity, and have been silent for weeks with no one publicly contradicting them. Precious time was wasted as trust continued to erode and customers voted with their feet. They left the bank or sold shares.

Perhaps he should have said a bold “whatever it takes” from the Federal Reserve last fall, “We are doing everything we can to stabilize CS.” Even if confidence cannot be expressed in numbers, the warning signs were already there.

The federal government, Finma and the National Bank should have reined in the bank bosses sooner – long before the dying CS threatened the financial center and the global financial system.

In extraordinary session, members of the federal legislature can debate bonus ceilings and vote on the billions of loans they can no longer replace. But what is needed right now is an effective early warning system and a plan for what to do when the alarm bells begin to ring softly.

The goal should be for Switzerland to be able to stabilize the last remaining major bank, calmly and without external pressure, if it gets in trouble. It should not be taboo to closely accompany senior management if they cannot do it on their own. Bank bosses may complain about such an offer. But even wealthy Switzerland couldn’t save its new megabank UBS over the weekend with emergency law and emergency loans.

Source :Blick