The purchase a year ago Credit Suisse by UBSat the request of the Swiss Government to save the first of these entities from bankruptcy, has generated new risks and challenges for the Swiss economy, warns this Thursday the Organization for Economic Cooperation and Development (OECD).
In a report on the general situation of the Swiss economy, the Paris-based organization underlines that the acquisition agreed on March 19, 2023 to guarantee the financial stability of the Central European country (Credit Suisse was the second largest national bank) continues to generate uncertainty for having converted UBS in the great dominator of Swiss banking.
The bank has become the second largest in Europe in market capitalization, although before the merger it was more than six times larger than Credit Suisse.
“UBS, already a globally systemically important bank before the merger, has become even larger and in accordance with regulations to avoid potential falls of large entities (‘too big to fail’) must meet even stricter regulatory requirements“, highlights this Thursday the OECD.
The organization highlights that UBS and Credit Suisse combine 25% of Swiss national deposits and loans, whose competition authorities have shown interest in investigating the new giant’s dominant position in certain sectors of the local financial market.
The report of the OECD also remembers the impact of the merger on the AT1 bond market, after the operation reduced debt securities of this type to zero for 16,000 million Swiss francs (16,600 million euros), converting thousands of bondholders ( currently in litigation with UBS, Credit Suisse and the Swiss authorities) in those largely affected by the acquisition.
The OECD In its report, it foresees growth of 0.4% for the Swiss economy in 2024 and 1.4% in 2025 (below the recent national average of 1.8%), affected by a weakening of foreign demand, more difficult conditions for financing and an increase in uncertainty.
Source: Gestion
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