Swiss parliament symbolically rejects Credit Suisse rescue

On April 13, 2023, 4:54 AM

The Swiss lower house of parliament voted overwhelmingly on Wednesday against the 100 billion Swiss francs (roughly $110 billion or €100 billion) rescue package that saw banking giant UBS taking over its rival Credit Suisse.

The rebuke is, however, only symbolic, with the money already having been signed off by the Swiss government via an emergency law.

“This decision has no impact on the takeover of Credit Suisse decided on March 19,” the Swiss Finance Ministry said after the vote.

“On March 19, 2023, the Finance Delegation of the Swiss Parliament had already given its binding approval to the commitment credits on behalf of Parliament due to the urgency of the matter,” it said.

Rejection sends a ‘bad signal’

Wednesday’s vote came after the upper house offered amendments to sweeten the deal following previous failed votes.

It saw parties from the right and the left wings of the parliament come together in a rare voting bloc, with the final tally at 103-71.

The government’s decision to push through the rescue package has angered many in a country that is used to frequent referendums on a variety of policy issues.

When is a bank systemically important?

Despite the mere symbolism of Wednesday’s vote, the attempt by the upper house to seek a compromise makes clear how muchthe government had hoped to secure the legislature’s retrospective approval.

“It doesn’t really matter what we decide in detail, but it would really send a bad signal if these loans were rejected,” Eva Herzog, a member of the Council of States, the upper house, said before the vote.

Why did the Swiss government orchestrate the Credit Suisse buyout?

The Swiss government negotiated the UBS buyout of Credit Suisse in order to prevent the 167-year-old banking institution from collapsing and possibly triggering further crashes across the global banking system.

UBS agreed to pay 3 billion Swiss francs to take on its troubled rival but on the condition of billions more in guarantees from the Swiss central bank.

The government may have prevented further banking troubles with its rescue deal, but Wednesday’s vote represents disapproval of the move ahead of legislative elections set to take place this October.

Story By DW