Reader question: Will Credit Suisse crisis impact my savings in Switzerland?
In many people’s minds, Swiss banks are synonymous with scandals. Past and present events have shown this is sometimes true, but what — if any — effect will all these financial wheelings and dealings have on your money?
Usually, things that happen in Switzerland don’t reverberate around the world — except when the country’s banks are involved.
Living in a globalised and interconnected world means that scandals plaguing a Swiss bank, especially the nation’s second-largest one, will affect markets far beyond Switzerland’s borders.
And failures attributed to Credit Suisse, which sent its shares into free fall on Wednesday, are many:
Credit Suisse: The list of scandals stalking Switzerland's second largest bank
Fortunately, as financial markets plunged in response, the news came that the beleaguered bank will borrow up to 50 billion francs from Switzerland’s central bank (SNB); after the announcement, Credit Suisse shares jumped more than 30 percent when markets opened early on Thursday.
READ MORE: Credit Suisse shares surge after 50-billion-franc lifeline from Swiss central bank
What impact is this crisis having?
You may think it impacts only the bank itself and the financial sector in general, but the consequences are far wider.
Such an event “harms society as a whole, rather than just the investors who took the risk,” according to economist Samuel Bendahan.
“The real risk is the crisis of confidence,” he said, referring to loss of trust that can damage the bank's image and reputation.
And, “if the economy suffers, everyone pays."
What about the clients? Should they worry about their money deposited in Credit Suisse?
“No, not really, because there is a guarantee for small deposits in Switzerland,” Bendahan pointed out.
As The Local reported on Wednesday, Swiss banks, including Credit Suisse, are “very safe,” in international comparison, both in terms of capital and liquidity, according to Robert Reinecke, spokesperson for Swiss Banking Association (SBA).
“They have a very robust capital base even in stress scenarios,” he added.
Assets deposited in either Swiss banks or foreign financial institutions that operate a branch in Switzerland must be licensed, regulated, and supervised by the Swiss Financial Market Supervisory Authority FINMA.
As an additional safety measure, "Swiss law demands capital adequacy standards” to ensure solvency, according to SBA.
While your deposits are covered up to 100,000 francs, there are additional protections in place as well for customers of cantonal banks.
According to Moneyland consumer platform, “many cantonal governments fully guarantee the account balances of their corresponding cantonal banks."
This article has more information about how your money is protected in Switzerland:
How safe is your money in a Swiss bank?
Is this the first time a Swiss bank has recorded major losses?
No.
As a consequence of risky expansion strategies in the midst of the 2008 global financial crisis, UBS faced a 20-billion-franc deficit — the largest ever in Swiss history.
The Federal Council and the SNB stepped in to save Switzerland’s largest bank from ruin by injecting 60 billion francs to restore some of the bank’s assets.
READ MORE: ANALYSIS: How the latest banking scandal has damaged Switzerland's reputation
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Usually, things that happen in Switzerland don’t reverberate around the world — except when the country’s banks are involved.
Living in a globalised and interconnected world means that scandals plaguing a Swiss bank, especially the nation’s second-largest one, will affect markets far beyond Switzerland’s borders.
And failures attributed to Credit Suisse, which sent its shares into free fall on Wednesday, are many:
Credit Suisse: The list of scandals stalking Switzerland's second largest bank
Fortunately, as financial markets plunged in response, the news came that the beleaguered bank will borrow up to 50 billion francs from Switzerland’s central bank (SNB); after the announcement, Credit Suisse shares jumped more than 30 percent when markets opened early on Thursday.
READ MORE: Credit Suisse shares surge after 50-billion-franc lifeline from Swiss central bank
What impact is this crisis having?
You may think it impacts only the bank itself and the financial sector in general, but the consequences are far wider.
Such an event “harms society as a whole, rather than just the investors who took the risk,” according to economist Samuel Bendahan.
“The real risk is the crisis of confidence,” he said, referring to loss of trust that can damage the bank's image and reputation.
And, “if the economy suffers, everyone pays."
What about the clients? Should they worry about their money deposited in Credit Suisse?
“No, not really, because there is a guarantee for small deposits in Switzerland,” Bendahan pointed out.
As The Local reported on Wednesday, Swiss banks, including Credit Suisse, are “very safe,” in international comparison, both in terms of capital and liquidity, according to Robert Reinecke, spokesperson for Swiss Banking Association (SBA).
“They have a very robust capital base even in stress scenarios,” he added.
Assets deposited in either Swiss banks or foreign financial institutions that operate a branch in Switzerland must be licensed, regulated, and supervised by the Swiss Financial Market Supervisory Authority FINMA.
As an additional safety measure, "Swiss law demands capital adequacy standards” to ensure solvency, according to SBA.
While your deposits are covered up to 100,000 francs, there are additional protections in place as well for customers of cantonal banks.
According to Moneyland consumer platform, “many cantonal governments fully guarantee the account balances of their corresponding cantonal banks."
This article has more information about how your money is protected in Switzerland:
How safe is your money in a Swiss bank?
Is this the first time a Swiss bank has recorded major losses?
No.
As a consequence of risky expansion strategies in the midst of the 2008 global financial crisis, UBS faced a 20-billion-franc deficit — the largest ever in Swiss history.
The Federal Council and the SNB stepped in to save Switzerland’s largest bank from ruin by injecting 60 billion francs to restore some of the bank’s assets.
READ MORE: ANALYSIS: How the latest banking scandal has damaged Switzerland's reputation
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