The forced takeover of Credit Suisse by UBS in exchange for a lentil board together with the granting of strong financial guarantees by the Swiss authorities is drawing sharp criticism in Switzerland of “amateurism” and “damaging the country’s reputation as a financial centre”.

But investors are not reassured either, amid a very negative global climate for the banking sector which has been hit by interest rate hikes by major central banks.

UBS shares were down 6% at mid-day and Credit Suisse shares were below 76 cents, the price at which Switzerland’s biggest bank bought it yesterday for 3 billion Swiss francs.

The Union des Banques Suisses gave in half-heartedly to become Credit Suisse’s savior under stifling pressure from the Swiss authorities, which had previously been the target of strong pressure from their big financial partners worried about possible contagion.

“Shame on Switzerland”

Neither the press nor Swiss politicians are mincing their words about the merger, which creates a superbank and raises questions about its size in Switzerland and the economic consequences that will come from it, especially on employment, because of the many overlaps between in the two banking institutions.

Read about: Markets not reassured by Credit Suisse takeover – Risk of layoffs

The slow reaction of the authorities is also complained about in Switzerland. It took the announcement late yesterday afternoon of the agreement for the Swiss government to take the floor after a week of crisis and chain meetings.

Switzerland’s central bank and the regulator let the stock market wind down on Wednesday before finally reacting slowly towards the end of the afternoon.

The president of the liberal right, Thierry Burckhardt, speaks of “shame on Switzerland” and calls yesterday “a black day for the financial position of Switzerland and for the whole of Switzerland”.

For the Tribune de Genève newspaper, it is a “social (for employment), economic (for the reputation of the country) mess and political disgrace for the leadership that took too long to react.”

There are also many who decry the slowness in identifying the dangers and reacting, from the Green Liberal party to the editor of the lead article in the newspaper Le Temps.

Many political officials and journalists acknowledge, however, that there were no other options after the government talked about nationalization as the only alternative if negotiations with UBS failed.

As for the radical right (UDC), the largest political faction in Switzerland, it considers adventurism abroad to be fatal, where Credit Suisse has been very profitable. It also denounces the influence of regulators and foreign supervisors on the bailout plan.

“A zombie disappeared, but a monster was born“, is the headline of the newspaper Neue Zürcher Zeitung.

And where is UBS in all this?

UBS comes into this forced marriage on the back of health – in 2022 it had a profit of 7 billion Swiss francs – and having implemented a tried and tested strategy. But the merger is not without risk for the Zurich banking giant.

“There are a lot of uncertainties and significant risks,” said Andreas Venditti, an analyst at Vontobel, who stressed that the way investors evaluate UBS will change significantly.

Union des Banques Suisses was the world’s No. 1 in asset management, but this merger will create a behemoth in the sector with $3.4 trillion in assets under management.

UBS shareholders have no say in the takeover capital to move quickly.

The merger also risks having a heavy impact on employment in Switzerland, due to the overlaps that exist in the retail operations of the two banks.

UBS relies on a network of around 200 branches in Switzerland compared to 95 for Credit Suisse.

Both banks deal with asset management.

The Swiss arm of Credit Suisse is mainly active in the areas of mortgages and loans to small and medium-sized enterprises.