Due to my experience in the executive management of the SNB Stabilization Fund and my long CS past, I was asked to comment on the recent events

  • This CHF 50+ billion loan from the SNB to Credit Suisse is not a bank bailout but a pure liquidity provision. There is nothing objectionable about providing liquidity to a bank. One of the main tasks of a central bank is to do this in extraordinary market situations. The condition is that the bank is solvent. A bank bailout would have been if, similar to UBS in 2008, the Swiss Confederation had subscribed to a mandatory convertible bond or, as in the case of the StabFund, a transfer of balance sheet assets had taken place.
  • I lack details but as I understand it, these are not unsecured loans to CS, but a pool of collateral secures the loan. I think it was very smart that part of CS’s  Swiss mortgage portfolio was taken as collateral. I.e. these CHF 50+ billion are covered and secured by haircuts and would be fully repaid, even if CS got into difficulties.
  • A bank run can also affect healthy banks. The comments from Saudi Arabia were misunderstood and this caused panic among some. I also think that on 15th March a bank run was underway. Without further statements and measures on 16th March this would have led to accelerated outflows that would have threatened CS.
  • In my view, the situation was triggered by an unjustified politically motivated bailout of SVB. The U.S. authorities’ actions to provide generous financing to the insolvent SVB were interpreted in the financial markets in a panic, suggesting that the problem is much bigger than it is. Unfortunately, in Switzerland, especially left-wing politicians, criticized the liquidity aid to CS, but did not mention with a single word that the panic happened due to a political bailout of a bank whose clients represent “key donors” of the US Democrats for the upcoming presidential election. From a socio-political point of view, the actions in the US seem much more questionable to me. And this connection was missing yesterday in the comments of politicians and the Swiss media alike. I still do not see a systemic crisis in the U.S. banking system, but relative shifts and further consolidation
  • The question is how to proceed from here. The value of a bank as a service provider depends on the quality of its employees. If this is guaranteed, the money that flew out will also return. Unfortunately, I observe good employees leaving the bank every day. In the longer term, this is a bigger problem. I left CS because of the culture. I found many actions were only driven by short-term fee thinking or the respective bonus maximization and not motivated to provide long-term value to clients and investors. What is needed now, is a management that can inspire people. Anyone can cost-cut. True entrepreneurial personalities who can convey a “WE” feeling were and are unfortunately in short supply in the current and past BoD and executive management of the bank.