No menu items!

Swiss bank’s death opens country’s unprecedented identity crisis

By Jamil Chad

After Toblerone, now it’s the banks’ turn.

Switzerland woke up on Monday with its image severely damaged.

Faced with the agreement of the purchase of Credit Suisse by UBS this weekend, the country with its history intertwined with its banks now wonders: are we still reliable?

Credit Suisse, Swiss bank’s death opens country’s unprecedented identity crisis
For the country’s recent history, this is an unprecedented earthquake (Photo internet reproduction)

In the country’s leading newspapers and the speeches of various political parties, the feeling is one of “shame”.

Meanwhile, questions proliferate about how the complex bank control mechanisms established after 2008 failed to prevent such a catastrophe in a bank that dictated international confidence about the local financial market.

After the US$54 billion credit line offered by the authorities failed to calm the markets last week, the government forced a deal for the country’s largest bank, UBS, to buy the second largest, Credit Suisse.

In practice, an institution that was living in limbo dies.

A sacrifice to save the system, using another bank as the receiver.

The problem is that a monster is born in its place that, if it suffers problems, will represent an even greater risk to the world economy.

UBS inherits hundreds of lawsuits from a bank with 17,000 employees in Switzerland alone that lost billions a day last week.

The Swiss government has offered US$9 billion as a cushion so that Credit Suisse’s new owners have the financial space to cope with the merger process.

But in the corridors of the banks this morning, many are wondering: will it be enough?

The crisis, however, goes far beyond the commercial aspect between the two banks.

Managers, politicians, and analysts agree that the incident shakes international confidence in the country’s financial sector.

Switzerland has become “smaller.”

For many, this is a crisis of the Zurich elites.

Not coincidentally, as the bank’s funeral was being held, players in Swiss politics insisted that the responsibility for Credit Suisse’s demise lay with foreign managers unfamiliar with Swiss financial culture and opted for an internationalization of the institution.

But for realists, there is no longer any way to disassociate the bank from the country.

“It’s called Credit Suisse. There is a Switzerland within the name,” said Stephan Garelli, professor at the IMD Institute.

For the country’s recent history, this is an unprecedented earthquake.

The bank was responsible for building the country’s railroads in the 19th century, financed Switzerland’s industrial transformation, and became part of the country’s own identity.

It was also the name on the country’s ski resorts, on Roger Federer’s smile, and accompanied the national soccer like a seal of approval.

In Zurich, if Credit Suisse was the synonym for Swiss competence and seriousness for years, the catastrophe reveals the overconfidence of a bank that assumed its role as “too big to fail” and of a society that bet on a unique position in the world.

The historical scandal and undignified end shook the Swiss financial market and its international credibility.

If one of the 30 largest banks in the world can still go bankrupt after all the controls and requirements put in place amid the crisis of capitalism in 2008, how long will it take to regain confidence?

Even Swiss watches can’t tell.

With information from UOL

Check out our other content