ZURICH (Reuters) – UBS’s emergency bailout of Credit Suisse a year ago created “new risks and challenges” for the Swiss economy, the Organization for Economic Co-operation and Development (OECD) said on Thursday.
While the takeover has preserved financial stability, it nevertheless raises questions about UBS’s hegemony in Switzerland and the need for stricter financial regulation in the future, the OECD said in its economic study on the country.
This bank merger orchestrated by the authorities created an establishment whose assets exceed the gross domestic product of Switzerland.
The operation made it possible “to stabilize the crisis situation within Credit Suisse and to control the risks of repercussions, thus preserving financial stability”, notes the OECD. “But it raises new risks and challenges.”
UBS, already considered a globally systemically important bank before the merger, has become even larger and “under the ‘too big to fail’ (TBTF) regulation, it must meet even stricter regulatory requirements”, adds the OECD.
In its report, the OECD also worries about “costly litigation” that could result from efforts by holders of Credit Suisse Additional Tier 1 (AT1) bonds to be compensated when the value of their securities has been reduced to nil with the takeover by UBS.
In its economic forecasts for Switzerland, the OECD expects GDP growth of 0.9% in 2024 and 1.4% in 2025, a little less than the government’s forecasts of 1.1% and 1.4% in 2025. .7% respectively.
(Reporting by John Revill, Blandine Hénault for the , editing by Kate Entringer)
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