8 Min(s) Read
By S Murlidharan Mar 21, 2023 11:39:34 AM IST (Updated)
Obsession with size comes at a price as happened with Credit Suisse and succinctly captured by WSJ. In the years that followed the chastening sub-prime crisis of 2008 having its epicentre in the US global banking became more conservative. Major banks shed extraneous units and focused on what they could do best.
Banking is the mainstay of Switzerland whose Constitution guarantees banking secrecy to its depositors and customers. Small wonder, its government on 19th March 2023 announced through an Ordinance that the beleaguered Credit Suisse would merge with UBS in a manner of bigger fish swallowing the small. A country notorious for its secrecy and minimum disclosures, the merger was consummated without the approval of shareholders of the two banks.
Such was a tearing hurry. Banking being its mainstay, the Swiss government obviously thought its banks were too important to fail. Any further meltdown of Credit Suisse would have had a ripple effect on the entire Swiss economy, affecting its reputation as bankers to the rich and famous. UBS is conservative and Credit Suisse is swashbuckling. It would be an interesting marriage.