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Commentary
When you think of Switzerland, many people probably think of watches and banks. All due to the country’s reputation for producing quality products in all these areas.
Well, the clock in the Swiss banking sector is ticking, if not ticking, so it’s time to think again.
With an enviable reputation as part of the world-class Swiss banking sector, Credit Suisse is virtually no longer part of the zeitgeist thanks to its decision-making.
Credit Suisse, once established as a leading financial services company advising clients around the clock on all aspects of finance around the world, was humiliatingly acquired by rival UBS. no longer exists.
This appears to have been a very quick orchestration of alleged takeovers not only in Switzerland but throughout Europe, if not the world, in order to avoid irreparable economic chaos.
Simply put, Credit Suisse was too big to fail. Unfortunately, the fact that it failed is largely obscured by the acquisition by UBS.
At the very least, shareholders will take some relief from a situation that could have been much worse without intervention by the government and its more important competitors.
Is this the exception, or has the House of Cards collapse begun?
Given the development across the waters of Silicon Valley, with rumors of bank failures and other corporate instability, the demise of Credit Suisse will put financial markets around the world in serious trouble.
If there was one robust banking system, it would be the Swiss system, with a long and enviable track record of stability and tight controls. The term “banking primacy” was synonymous with the Swiss banking system.
The concern is that if Credit Suisse could go bust, so could all other financial institutions.
For too long, financial market participants seemed to think that the foundations were so secure and fortified that failure or collapse was not an option or a possibility.
This shows how horribly wrong this chain of events happened, and how quickly it happened.
Everyone will make their own diagnosis of what went terribly wrong and why.
Some explanations are overly defensive, arguing that their banking model is no longer appropriate for the times, reflecting the control and control of billions of investors’ dollars.
A full and thorough dissertation-worthy analysis of management’s inability to read and respond to markets needs to be done.
That paper might have a section devoted to leaders taking their personal and collective eyes off the ball to pursue trendy policies and agendas. Forget about the smooth rise of carbon dioxide from champagne glasses, an agenda that allows for a ‘sophisticated’ discussion at a soirée of a carbon-controlled world order.
It was only a few days ago that Credit Suisse boasted of a commitment to reduce absolute emissions linked to financing of the oil, gas and coal sector by 49% by 2030. It said emissions from lending to customers had decreased64. We are not responsible for this questionable strategy.
As the prices of these commodities steadily rose and earnings continued to rise, Credit Suisse investors were denied profits based on dubious ideology at best rather than sound investment consideration.
An analysis of what lessons were learned from the 1995 Barings and 2008 Lehman Brothers bankruptcies, and what steps were taken to avoid such catastrophes, deserves another PhD. I guess. That said, most of us may have already written our conclusions.
Some commentators have warned corporate executives that they will be bankrupt when they wake up.
For most managers, it is not personal money that disappears, but investors who are convinced to invest with them.
Their responsibilities are overwhelming and it is said that they deserve an overwhelming salary package because of it.
But if it fails, it looks like shareholders will lose their hard-earned dollars, while those responsible can retire with their sizable past gains or simply slide into the next gig.
Credit Suisse’s business strategy had more holes than the country’s famous cheese. So let’s hope bankers around the world return to investment strategies that put fiduciary duty to investors first.
Views expressed in this article are those of the author and do not necessarily reflect those of The Epoch Times.
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