Switzerland’s decision last year to merge Credit Suisse with UBS was an “unhelpful” way to deal with a failing global bank and US regulators would not shrink from a full shut down in a similar situation, the chair of the Federal Deposit Insurance Corporation has warned.
Martin Gruenberg spoke to the Financial Times as his agency issued a paper detailing how it would handle the collapse of a global systemically important bank (G-SIB) such as Credit Suisse. He said the FDIC was seeking to remind shareholders, creditors and executives that they cannot rely on government bailouts similar to those that stabilised the financial system after Lehman Brothers collapsed in 2008.
“The fact that Swiss authorities did not put Credit Suisse into resolution . . . was frankly unhelpful and ultimately a missed opportunity,” Gruenberg said ahead of a speech on Wednesday about shutting down global banks. “The purpose for this work . . . was to reaffirm that we believe we are prepared to apply the resolution framework.”