ZURICH (Reuters) – A poll of Swiss economists found that nearly half think the takeover of Credit Suisse by UBS was not the best solution, warning the saga has dented Switzerland’s reputation as a banking centre.
Switzerland’s KOF economic research institute found that 48% of the 167 university economists it questioned would have preferred a state takeover and possible later sale of Credit Suisse.
“The advantage of this alternative would have been that it would not have created a banking giant by Swiss standards and would have preserved the intensity of competition in the Swiss banking market,” KOF said in a statement on Friday.
“At the same time, however, this state solution would probably have created even higher risks for Swiss taxpayers.”
Only 19% of the economists in the poll, which was conducted with newspaper Neue Zuercher Zeitung, thought the UBS takeover was the best option, although supporters said it meant financial markets could be stabilised quickly and work on restructuring Credit Suisse could start promptly.
UBS agreed to buy its cross-town Zurich rival Credit Suisse for 3 billion Swiss francs ($3.3 billion) in a deal engineered by the Swiss government, central bank and market regulator to avoid a meltdown in the country’s financial system.
But the forced deal, which was also designed to help secure financial stability globally during a period of turmoil, has critics concerned about the size of a new bank with $1.6 trillion in assets and more than 120,000 staff.
In Switzerland, the public and politicians have also voiced concerns about the level of state support, with nearly 260 billion Swiss francs in liquidity and guarantees offered by the government and Swiss National Bank.
Restructuring Credit Suisse under ‘too big to fail” rules was favoured by 28% of respondents. This would have meant rescuing the systemically important Swiss business of Credit Suisse and the international part restructured or wound up.
The remaining 6% of respondents favoured other options, including a takeover by a foreign bank, or a pledge of massive support from the SNB to support Credit Suisse.
Three quarters of the economist rated the takeover as a good deal for UBS, while only 12% thought it disadvantageous.
Still, the fall out from the crisis has dented confidence in the Swiss financial centre, with 80% of the economists saying the country’s international reputation had suffered.
The poll follows a survey by GFS Bern showing 54% of the public not agreeing with the takeover, with 35% supporting it.
Some 40% of the public thought a temporary state takeover of Credit Suisse would have been a better solution, the GFS Bern survey said. But 51% thought a controlled bankruptcy of the bank was a worse outcome than the UBS deal.
($1 = 0.9170 Swiss francs)
(Reporting by John Revill; Editing by Alexander Smith)
