PARIS, March 20 — The buyout of Credit Suisse, a bank considered too big to fail, by its Swiss rival UBS, has brought back into focus the difficulty of saving so-called...
PARIS, March 20 — The buyout of Credit Suisse, a bank considered too big to fail, by its Swiss rival UBS, has brought back into focus the difficulty of saving so-called systemically important lenders.
The list includes JP Morgan Chase, Bank of America, CitiGroup, HSBC, Barclays, BNP Paribas, Deutsche Bank, Santander, UniCredit, UBS, as well as others including Credit Suisse. He pointed to the failure of two banks in the United States earlier this month. Despite their moderate size, both were key to serving certain sectors of the US economy, which prompted authorities to rescue them to avoid a widespread bank crisis, with only limited success.For the past two years Switzerland's number two bank had suffered a series of scandals that provoked huge losses. Confidence in the bank eroded and suddenly it had difficulty accessing funding at reasonable rates.
Even if Credit Suisse's reserves weren't in a critical state, Swiss President Alain Berset said the takeover was the"best solution for restoring the confidence that has been lacking in the financial markets recently" and to prevent a run on the bank. He said investors and executives don't have to same incentive to adopt rigorous management because they know they will be bailed out in any event.
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