Following the takeover of Credit Suisse by UBS – there are now worries about the potential legal fallout and questions if the new bank is too big for Switzerland.
The balance sheet of the new bank is CHF 1.5 trillion – that’s twice as big as the whole country’s economic output.
Politicians are asking what does the government do if UBS gets into trouble? The bank needed assistance in 2008.
A finance professor at the University of Zurich, Marc Chesney, told the Blick newspaper the bank is far too big and creates a risk for the economy and society.
There are also legal risks. So far there’s been no reaction by the two big Credit Suisse shareholders – the Saudi National Bank and the Qatar Investment Fund. Both would have lost an enormous chunk of their investment following the Swiss government backed takeover.
Bern has backed a deal which needs a law change and damages property rights. A law professor, Peter Kunz, told the press that investors can now expect to be expropriated without a proper process.
He’s predicting a flurry of lawsuits.
Meanwhile the UBS Chair, Colm Kelleher, says the deal is an opportunity for Switzerland and the new bank will begin to dispose of the toxic assets currently held by Credit Suisse’s investment division.
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