Swiss Parliament's Upper House approves Credit Suisse rescue, Lower House disagrees
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Credit Suisse’s rescue angered not only politicians but many in Switzerland.
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BERN – Switzerland’s Upper House of Parliament voted on Tuesday to retrospectively approve 109 billion Swiss francs (S$160 billion) in financial guarantees used to rescue Credit Suisse,
Twenty-nine of Switzerland’s 46-member Council of States approved the measure.
However, the Swiss Parliament’s Lower House later voted against approving the government guarantees for UBS Group’s takeover of Credit Suisse Group. In total, 102 lawmakers in the Lower House cast their ballots against the motion, 71 were in favour, and two abstained in the vote.
The Swiss Parliament had recalled lawmakers for a rare extraordinary session to discuss the rapid rescue of Credit Suisse, as well as the government’s open cheque book response.
A shotgun marriage that saw Credit Suisse taken over by Zurich-based rival UBS
The votes are, however, largely symbolic as the state has committed the funds and lawmakers cannot overturn that decision. Lawmakers also acknowledged their lack of power over the deal.
In the lead-up to the merger in March
“The use of emergency law has reached a level in the last three years that is beginning to annoy me,” said Mr Hansjoerg Knecht, a member of the Swiss Parliament’s Upper House.
Calling the situation where the legislative body can approve only the already committed credits “unsatisfactory”, Mr Knecht said that if Credit Suisse were to require more cash, there should be no use of emergency law to bypass Parliament.
The Bill will now be sent back to the Upper House for further debate.
The government had said in a statement that “if Parliament refuses subsequent approval, it will be tantamount to a political reprimand” for the group of senior lawmakers that gave it the green light, but would have “no legal effect”.
The Lower House’s rebuff of the government-brokered deal came despite repeated speeches by senior government ministers that the UBS takeover was the best of a limited number of options.
Swiss President Alain Berset said earlier on Tuesday that Credit Suisse’s “negative spiral” spurred his government into action and that, together with the Swiss National Bank and the country’s banking regulator, it had acted in “a decisive manner to restore confidence”.
‘Lots of questions’
“It’s the responsibility of politics to have a say, especially when such a big contribution is being made by state and emergency law is being used,” said Ms Celine Widmer, a Swiss National Council member for the left-leaning Social Democrats.
“We have a lot of questions that need to be answered,” she told Reuters ahead of the vote.
As part of the unusual event, the third such session in more than 20 years, the Swiss Parliament has a chance to challenge the rushed rescue package and discuss whether conditions can be imposed on Credit Suisse.
Last week, Switzerland announced it was cutting bonus payments for Credit Suisse’s top management.
Credit Suisse’s rescue angered not only politicians but also many in Switzerland. A survey by political research firm gfs.bern found that a majority of Swiss did not support the deal.
A poll of Swiss economists found that nearly half think the takeover of Credit Suisse by UBS was not the best solution, warning that the saga has dented Switzerland’s reputation.
Switzerland’s KOF economic research institute found that 48 per cent of 167 university economists questioned would have preferred a state takeover and possible later sale of Credit Suisse.
There are also growing worries about a staff cull.
In an open letter to the country’s Parliament, the Swiss Bank Employees’ Association said on Tuesday that Credit Suisse and UBS must freeze any job cuts. REUTERS, BLOOMBERG
