Swiss consumer watchdog calls for more bank deposit protection

Bank client savings are exposed to insolvencies, says the Swiss consumer watchdog. © Keystone / Christian Beutler

Bank deposit insurance is insufficient and should be beefed up in the wake of the Credit Suisse collapse, says the Swiss Foundation for Consumer Protection.

Last month, the government stepped in to prevent the bankruptcy of Credit Suisse by forcing through a sale to rival UBS.

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Savings of up to CHF100,000 ($110,000) are currently protected by insurance in the case of a Swiss bank insolvency.

The insurance system is backed up by a CHF8 billion pool funded by banks, which comes into play if deposits cannot be covered by the failing bank. This pool covers 1.6% of all protected deposits in Switzerland.

Swiss consumer watchdog chief Sara Stalder has complained this is insufficient.

“If we want to do without government support measures in future banking crises, the banks themselves must ensure stability,” she said on Monday.

This means forcing banks to pay more funds into the Esisuisse insurance pool.

“1.6% is by no means sufficient for the credible protection of savings,” she said, without offering an alternative figure.

The consumer protection agency had previously called on the authorities to improve ‘too big to fail’ bank regulations and to cancel Credit Suisse bonuses.

The government has told Credit Suisse to freeze or slash bonuses to high-ranking staff.

Both parliamentary chambers are holding a special session this week to examine the events leading up to the bank crisis and to debate future measures for the financial centre.