Swiss parliament okays Credit Suisse rescue
Swiss Parliament has approved a 109 billion franc ($117 billion) rescue plan for Credit Suisse. The upper house of Switzerland’s parliament controversially agreed to retroactively accept the financial guarantees included in the rescue plan during an urgent session planned to evaluate Credit Suisse’s financial status. The choice was taken following large losses incurred by Credit Suisse as a result of the failure of Greensill Capital and the family firm Archegos Capital. The Swiss bank suffered a loss of $4.7 billion as a result of having to take hefty write-downs on loans given to both businesses. The rescue plan involves guarantees on Credit Suisse’s current debt as well as a capital injection from the Swiss government for 1.8 billion francs ($1.9 billion).
NewsOTG gathered that the plan attempts to stabilize Credit Suisse’s financial position and stop further harm from occurring to the Swiss banking industry. The action is being taken as the Swiss government works to preserve its standing as a global financial hub and avoid a repeat of the 2008 banking crisis, which required the government to bail out numerous Swiss banks. The choice to offer Credit Suisse financial assurances has generated debate, with some lawmakers contending that the bank ought to be left to fend for itself. The majority of members, however, think that the Swiss economy and the stability of the nation’s finances could be significantly impacted by the bank’s failure.
Credit Suisse will implement a new strategy centered on risk management and fortifying its balance sheet, according to CEO Thomas Gottstein. A restructuring at the bank will also result in the departure of several top executives. A scandal involving the bank’s supply chain finance funds, which were utilized to finance investments by SoftBank-backed fintech company Greensill Capital, has further tarnished the bank’s reputation. For failing to properly manage the funds, which were suspended in March 2021, Credit Suisse has come under fire. The bailout plan is an important step towards regaining public trust in Credit Suisse and the Swiss banking industry.
The bank still has a lot of work to do to repair its reputation and fortify its balance sheet, though. It will be interesting to observe if the bank is able to overcome these obstacles and develop into a stronger, more reliable institution.