Swiss regulators consider UBS takeover of Credit Suisse to prevent collapse

UBS would be able to reduce the size of Credit Suisse’s investment bank as a result of the purchase, with the combined firm constituting no more than a third of the newly combined business. A merger between UBS and Credit Suisse would result in the creation of one of the biggest and most systemically significant financial institutions in Europe. UBS has total assets on its balance sheet worth $1.1 trillion, while Credit Suisse has total assets at $575 billion.

Bypassing the typical Swiss regulations that call for a six-week consultation period during which shareholders can express their opinions on an acquisition, the emergency measures that are currently being considered would make it possible for the transaction to move forward without the approval of the company’s shareholders. Reportedly, the SNB and FINMA are aiming to secure a regulatory agreement by the end of the day on Saturday in order to conclude the purchase before to the opening of markets on Monday.

Credit Suisse has been shaken by a slew of financial scandals, the most notable of which are the failure of Greensill Capital, which had a portfolio worth $10 billion with Credit Suisse, and the loss of $4.7 billion as a result of the failure of family office Archegos Capital Management. In addition to this, legal action may be taken against the bank because of its part in the fall of supply chain financing company Lex Greensill’s corporate empire.

The Swiss National Bank (SNB) and the Swiss Financial Market Supervisory Authority (FINMA) had previously issued a joint statement on March 15, stating that Credit Suisse met the requirements imposed on systemically important banks regarding their capital and liquidity, and that should it be required, the SNB would provide Credit Suisse with liquidity. But, the authorities now feel that the only option to avert a complete collapse in trust in the bank is for UBS to purchase Credit Suisse.

The announcement of this news comes after the United States-based investment firm BlackRock indicated in a tweet on March 18 that it is not interested in purchasing Credit Suisse.


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Blockchain not suitable for CBDC, says Swiss national bank economist

Blockchain, the underlying technology of cryptocurrencies like Bitcoin (BTC), is not the right solution for a central bank digital currency, according to an economist at Switzerland’s central bank.

Carlos Lenz, chief economist at the Swiss National Bank, argued that blockchain-based decentralization features are not efficient for a state-controlled digital currencies like a digital franc, German-language Swiss newspaper The Handelszeitung reported Thursday.

The economist reportedly noted that there is a large number of technological opportunities for building a digital franc. “One could imagine a direct account with the National Bank. Not that we want to do that, but that would be the simplest form,” Lenz said. Another option could be using blockchain technology enabling digital currency operations without any central authority, he noted. However, blockchain is “very inefficient,” the economist argued: “I don’t think that a decentralized solution is ideal.”

Lenz went on to say that Switzerland’s central bank currently has no plans to introduce a digital fran. The economist emphasized that the “existing payment system works well,” and that there is no need for a CBDC in Switzerland. The economist elaborated that there’s also no risk that the franc could be replaced by other currencies like the euro if Switzerland prefers to stay away from the CBDC development.

The implementation of blockchain technology for state-controlled digital currencies has been questioned by many global financial experts. SNB’s alternative member Thomas Moser argued last year that blockchain use is unnecessary for a retail CBDC as the trust is already provided by the central party of a central bank. However, the SNB was still exploring blockchain-enabled benefits for implementing a CBDC last year.

Related: BIS joins France and Switzerland’s central banks on cross-border CBDC project

Despite ongoing arguments on whether CBDC really needs blockchain, the Chinese government continues to experiment with the distributed ledger technology for simplifying CBDC transactions. In mid-June, the People’s Bank of China successfully completed salary payouts in the digital yuan using blockchain technology.