Banking crisis has shaken country’s reputation as mainstay of Western financial system, says Opimas CEO
Problems at former major Swiss investment bank Credit Suisse are undermining Switzerland’s reputation as a global financial center, Opimas CEO Octavio Marenzi said as quoted by CNBC on Tuesday.
His warning follows a historic takeover of Credit Suisse by UBS Group, its domestic rival. On Sunday, the two banking giants announced a Swiss government-brokered deal aimed at bolstering public confidence in the Western financial system and averting a global crisis. UBS has agreed to acquire the beleaguered bank for three billion Swiss francs ($3.2 billion) in a cut-price deal.
“Switzerland’s position as a financial center is shaken” Marenzi reportedly said, adding that “The country will now be considered a financial banana republic.”
“The Credit Suisse debacle will have serious repercussions for other Swiss financial institutions. A national reputation for prudent financial management, strong regulatory oversight and, frankly, being somewhat austere and boring when it comes to investments, has been shattered,” Marenzi said.
The landmark merger, which could well make UBS the largest wealth manager in the world, with more than $5 trillion in invested assets, has nevertheless raised concerns about the health of the acquired assets.
Investors also raised fears of the delisting of $17 billion in AT1 bonds from Credit Suisse, which was part of the merger deal. This decision angered many creditors, who were left empty-handed, and revealed another risk for the banking sector. The former vice-president of the European Central Bank, Vítor Constâncio, described the delisting decision as “Mistake with consequences and potentially a host of court cases.”
There are also concerns about the long-term benefits of the merger and the prospects for other banks in Switzerland, which were previously seen as a model of sound banking.
For more stories on economics and finance, visit RT’s business space
You can share this story on social media: