Parliament lands symbolic blow against Credit Suisse bailout

Swiss President Alain Berset was in parliament to defend the government-backed deal. © Keystone / Alessandro Della Valle

Switzerland’s parliament delivered a stinging rebuke to the forced sale of Credit Suisse, with one chamber rejecting plans to prop up the deal with CHF109 billion ($122 billion) of state funds.

The House of Representatives on Wednesday voted against state guarantees for a second time, having already done so on Tuesday.

The Senate agreed to the bailout package for a second time. But its attempts to sweeten the deal by attaching demands to crack down on bonuses and ‘too big to fail’ banks failed to convince colleagues in the other chamber.

+ Where did it all go wrong for Credit Suisse?

Ultimately, the votes are purely symbolic as a parliamentary committee has already rubber-stamped the promised billions. The government said that although the parliamentary decision had no influence on the deal, it would take the political signal seriously.

The House of Representatives effectively dealt a vote of no-confidence in the government’s efforts to save Credit Suisse from catastrophic ruin by forcing through its sale to rival UBS.

The ‘No’ votes were mainly delivered by the left and right wings of the political spectrum.

“If a yes means that we will…calm down some kamikaze bankers and give them a guarantee that the paternal state will bear responsibility next time, then I will vote no.” said left-wing Social Democrat Roberto Zanetti.

Thomas Matter, of the right-wing Swiss People’s Party voiced “dismay, horror, shock, bewilderment, consternation”, adding: “Even worse than the collapse of Credit Suisse is the loss of confidence in Switzerland around the world.”

Parliamentary demands

A series of politicians called on the government to answer a long list of questions about the deal and its consequences.

The government has already promised a full report to parliament within 12 months. 

“It is our job to put chains on this monster [the future merged Credit Suisse/UBS] so it can never fool democracy again,” said Cédric Wermuth, president of the Social Democratic party.

This is only the third extraordinary parliamentary session in more than two decades – after one on the collapse of Swissair and one on measures to tackle the Covid-19 pandemic. Many politicians are angry that parliament was not consulted on the deal to save ailing Credit Suisse and the government credits granted as part of the package.

Parliament cannot block the deal, but it can impose conditions notably on how the CHF109 billion is used. The Green Party, for example, wants guarantees on climate sustainability, and there have been calls for limits on bank managers’ salaries and bonuses.

+ Why a monster UBS bank scares Switzerland

Interior Minister Alain Berset, who holds the rotating Swiss presidency this year, opened the session with a defence of the emergency deal, telling parliamentarians that the clock was ticking and “the government was forced to act, in the interest of the country, the institutions and the national economy”. He said confidence in Credit Suisse had not disappeared overnight but had been eroded for years by directors who had not learned the lessons of the previous financial crisis.

Indeed, Credit Suisse managers came in for some harsh criticism. In their greed for more profit they had ignored risks, Peter Hegglin of the Centre Party told the session. Social Democrat Eva Herzog said the 2008 financial crisis had not been enough to make the “Wolf of Wall Street” type of banker disappear. She and other politicians called for liability suits and claims for damages.

* This article has been updated from April 11 to reflect the House of Representatives vote delivered late in the evening.