The collapse of Credit Suisse has raised some hairy questions.Credit:AP
Aside from the sense of shame brought on by the bank’s collapse,legal observers say these three surprises raise some fundamental questions about the primacy of Swiss banking law and also sows doubt with foreign investors about putting money in the country.
“Foreign investors may wonder if Switzerland is a banana republic where the rule of law doesn’t apply,” said Peter V. Kunz,a professor specialised in economic law at the University of Bern. The country “is not endangered,but there might be the risk of lawsuits” because authorities “intervened here on very thin ice.”
Kern Alexander,a professor of law and finance at the University of Zurich,agreed,saying crisis management was carried out in a “panicked” way that “undermined the rule of law and undermined Switzerland.”
In announcing the government-brokered sale of Credit Suisse to its Zurich rival on Sunday evening,the Swiss government cited an article of its constitution that allows it to issue temporary ordinances “to counter existing or imminent threats of serious disruption to public order or internal or external security.” In this case,this included overriding merger laws on shareholder votes.
‘A lot of lawsuits will be coming from this,which will highlight the erratic and selfish behaviour of Swiss authorities in this saga.’
Jacob Kirkegaard,senior fellow at the Peterson Institute for International Economics
Then,when Finma chairwoman Marlene Amstad was asked during a press conference later that evening if the government was ignoring competition concerns in pushing the merger through,Amstad said financial stability trumped competition concerns.
“Regulatory law gives us the power to override the competitive situation in the interests of financial stability,and we have made use of that here,” she said.