The fall of Credit Suisse has damaged Switzerland's reputation as a wealth management center - experts
There is strong competition from other centers such as Luxembourg and Singapore
The collapse of Credit Suisse has dealt a serious blow to Switzerland's reputation as a leading global wealth management center, experts warn, as it has called into question the stability and effectiveness of regulation and corporate governance.
Source. This was reported by Reuters.
Switzerland manages $2.6 trillion in international assets, according to a 2021 Deloitte study, making it the world's largest financial center, ahead of the United Kingdom and the United States. But there is strong competition from other centers, such as Luxembourg and especially Singapore.
"Bankers in Singapore are popping the champagne," Arturo Bree of the International Institute for Management Development in Lausanne told Reuters.
Ravaged by years of scandals and losses, Credit Suisse struggled with a crisis of confidence for months before its fate was sealed in just a few days last week: the Swiss authorities brokered a takeover by its larger rival, UBS.
Confidence in Switzerland as a stable, predictable country has been undermined, for example, by the decision to write off the assets of Credit Suisse bondholders, Bree said.
At the same time, the holders of these AT1 bonds will not receive anything, because instead, shareholders, who usually rank below the bondholders in the order of compensation, will receive $3.23 billion.
Although the AT1 bonds issued by Credit Suisse were supposed to be written off in case of a "threat to the viability" of the bank, its collapse came as a complete surprise.
The Swiss Bankers' Association tried to maintain a brave face, presenting the rescue of Credit Suisse by the government, central bank and regulator as a sign of strength.
Despite this optimism, the number of banks in the country has fallen to 239, down from 356 in 2002.
In addition, the Swiss authorities have enacted an emergency liquidity act that allows them to provide up to CHF 100 billion to Credit Suisse.
Trade unions and politicians reacted with anger to this information, as the 9 billion francs in losses could end up being borne by taxpayers.
As reported, Switzerland will allocate $280 billion to rescue Credit Suisse, which caused a shock among the country's politicians.
Read more about this in Mind's article "Why Credit Suisse is "almost" bankrupt and whether it has a chance to survive".
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