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GENEVA, March 22 (AP) – Credit Suisse top executives are outraged. Regrets the damage to Switzerland’s image as a stable and reliable banking centre.
There is relief that authorities have stepped in to help protect deposits, but there is concern about investing the cash in a bank that is failing to adequately manage its own money.
On the streets of Switzerland, client sentiment at Credit Suisse was volatile after the government orchestrated rival UBS’ takeover of the country’s second-biggest bank this weekend – in an effort to prevent the global financial system from collapsing from the collapse of the two lenders. Further turmoil began. Bank of America.
How the merger, which is being sold for 3 billion Swiss francs ($3.25 billion), will play out and its impact on global finance is largely unknown.
That has left those stuck in the middle – customers and bank staff – unsure of what to expect next in the deal to create a major Swiss bank.
“My money has been invested in two or three banking institutions,” client Elisabeth Pictet said after leaving the largest Credit Suisse branch in central Geneva.
“I’m not a millionaire, but in the long run I’d probably prefer a local, regional banking institution.”
Pictet, whose husband is from a storied banking family in Switzerland, said she had not received any communication from the bank on how to proceed, but praised the government’s “wise decision” for reassuring many Swiss residents like her. She said Tuesday that she could easily withdraw cash.
“I’m very angry with the managers at Credit Suisse because, ultimately, their employees are going to lose their jobs — a lot of their jobs are professional,” said Pictet, 59, who is transitioning into retirement from a health care job.
“Now, we’ll just have one big bank – UBS – and that’s not good: it’s good to have competition, we won’t have any more.”
Asked whether Credit Suisse had told clients how to manage their assets since the deal emerged on Sunday, a spokeswoman for the bank said, “Until the deal is closed, business as usual for Credit Suisse and its clients.”
That may not be the case for Credit Suisse’s 50,000 employees, 17,000 of whom are in Switzerland, after the merger of the two banks.
The Swiss Bank Employees Association has called for layoffs to be kept to a minimum and not until the end of the year, with the government offering an unspecified job guarantee.
“It is unacceptable that companies are backed by taxpayers’ money and employees receive nothing,” the group said in a prepared statement.
“The billions in federal guarantees must be tied to conditions that favor workers.”
The implications of the merger are wide-ranging.
Many of Switzerland’s 8.5 million people have accounts with UBS or Credit Suisse.
“As a client, I am personally grateful that this has worked out,” Treasury Secretary Karin Keller-Sutter said at a news conference Sunday announcing the hastily arranged deal.
She said she had accounts with both banks.
“I think what we’re doing now is actually protecting people who have money at Credit Suisse,” Keller-Sutter said, allowing small and medium-sized companies to keep paying their employees, making deals and tapping their savings.
Octavio Marenzi, chief executive of consultancy Opimas LLC, agrees that Credit Suisse savers don’t have to worry about their money right now — though he noted reports last week of sudden withdrawals worth billions amid confusion about the bank’s future.
The Swiss central bank and the government have since provided loan guarantees worth hundreds of billions of dollars to the merged bank.
“Essentially, the Swiss National Bank has stepped in and said, your deposit is safe,” said Morenzi, whose firm focuses on capital markets.
A bank run is a risk even for the biggest and safest banks, but “for Credit Suisse, it does look very, very safe at this stage in terms of deposits. So I wouldn’t rush to move money out,” he said. explain.
It’s a different story for those entrusting their funds to Credit Suisse for wealth management or investment advice.
“It’s a fair question for those clients to scratch their heads and say, well, if you can’t manage your own money, why are you able to manage mine?” Marenzi said.
Swiss regulators and officials reportedly brokered the UBS takeover of Credit Suisse amid intense pressure from other Western governments and super-wealthy investors to head off more banking turmoil.
Credit Suisse’s problems – ranging from massive losses on hedge fund bets to an espionage scandal to a failure to stop a Bulgarian cocaine syndicate from laundering money – predate Bank of America’s recent collapse but have raised concerns about its vulnerability.
For some in Geneva, the imminent disappearance of a storied Swiss bank that traces its origins to the fledgling railroad industry of the mid-19th century is sad.
Credit Suisse client Mokhtar Zada, 78, a retired former financial sector worker from Afghanistan, said the collapse of Credit Suisse would not affect him because he also had an account with UBS to which he could transfer money if necessary.
“But what a waste,” said Zada, holding up a Credit Suisse savings booklet he first received in 1965 and which he had shown to bank employees as a memento.
“It’s such a shame that a bank that was more than 170 years old just disappeared like this.” (Associated Press)
(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)
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