Credit Suisse’s Bank Collapse - 2023

In the last few days, there has been alot of coverage of Credit Suisse and UBS bank. Indeed, this unexpected news is hard to believe. Let’s dive into the news and reveal some truths that might shock you.

Instability in the Swiss Banking System

Switzerland was one of the safest and most reliable places for investing in stocks or bonds. However, the collapse of Credit Suisse reveals some unpleasant truths. In the race to secure, the Swiss government allows UBS Group to buy Credit Suisse even though this is against the rights of shareholders and also competition law. This step was necessary for stability and emergency legislation.

Afterward, the bondholders discovered a type of “Additional Tier 1” $17 billion worth was worthless. This was very shocking and bad news for the investors. Aside from the sense of shame and collapse, alot of new important questions are raised about Swiss Banking law and also sow uncertainty for foreign investors. Now every foreign investor starts doubting whether to invest here or not.

Expert Concerns

According to economic professor Peter V. Kunz, “Foreign investors may wonder if Switzerland is a banana republic where the rule of law doesn’t apply.” Along with this, he mentioned that the country “is not endangered, but there might be the risk of lawsuits” because authorities “intervened here on very thin ice.”

In addition, a law and finance professor agreed with the current situation and criticized the government’s management. He referred to it as “panicked.” stating that it “undermined the rule of law and undermined Switzerland.”

Swiss Media to Credit Suisse Bank Collapse

Initially, the swiss media seemed not to pay attention to the headlines in financial times, instead focusing on the continuous debate about Switzerland’s support for Ukraine. With time situation got serious, and then it was too late to save damage. Markedly, the consequence threatens not just Switzerland but also the entire financial sector of Europe.

To sum up, the Swiss government had to find an urgent solution. Meanwhile, Swiss President Alian Berset said, “an uncontrolled collapse of Credit Suisse would lead to incalculable consequences for the country and the international financial system.”