Skip to main content

FINMA defends its decision.

 

Credit Suisse
Hours after the deal was announced, other reg­u­lat­ors dis­tanced them­selves from the decision, fear­ful that it would endanger banks’ abil­ity to raise cap­ital. Enraged bond­hold­ers have pledged to sue the Swiss gov­ern­ment and Finma. Finma, the Swiss regulator, said yes­ter­day that all the con­trac­tual and legal oblig­a­tions had been met for it to act uni­lat­er­ally given the urgency of the situ­ation. «On Sunday, a solu­tion was found to pro­tect cli­ents, the fin­an­cial centre and the mar­kets,» Finma chief exec­ut­ive Urban Angehrn said.

«Res­ol­u­tion in those cir­cum­stances would have triggered a big­ger fin­an­cial crisis, not just in Switzer­land but glob­ally». AT1s are a type of hybrid instru­ment cre­ated after the crash of 2008 to give banks greater cap­ital flex­ib­il­ity in the event of crises. As part of the acquis­i­tion deal by UBS, the com­bined bank will receive SFr9bn of gov­ern­ment guar­an­tees and an SFr100bn liquid­ity life­line from the SNB. An addi­tional emer­gency gov­ern­ment ordin­ance issued by Bern on Sunday had fur­ther con­firmed the power to take decisions over ele­ments of a bank’s cap­ital struc­ture, Finma said.

Quinn Emanuel Urquhart & Sul­li­van and Pal­las Part­ners are among law firms rep­res­ent­ing bond­hold­ers that have pledged to fight the decision. Part­ner Richard East said that the deal was «a res­ol­u­tion dressed up as a mer­ger» and poin­ted to state­ments by the ECB and the Bank of Eng­land, which dis­tanced them­selves from the Swiss approach. «You know something has gone wrong when other reg­u­lat­ors come and politely point out that in a res­ol­u­tion would have respec­ted ordin­ary pri­or­it­ies,» he said.

www.sba.tax

Comments

Cloud Bookkeeping

US FED rate rise.

  The US Federal Reserve officials have indicated that they plan to resume increasing interest rates to control inflation in the world's biggest economy. During the June meeting, the Federal Open Market Committee reached a consensus to keep interest rates stable for the time being to evaluate whether further tightening of policy would be necessary. However, the majority of the committee anticipates that additional rate increases will be required in the future. The minutes of the meeting have recently been made public. According to the minutes, most participants believed maintaining the federal funds rate at 5 to 5.25 per cent was appropriate or acceptable, despite some individuals wanting to raise the acceleration due to slow progress in cooling inflation. Although Fed forecasts predicted a mild recession starting later in the year, policymakers faced challenges in interpreting data that showed a tight job market and only slight improvements in inflation. Additionally, officials gr...

EU business slide.

  S&P Global’s flash eurozone composite purchasing managers’ index, a key gauge of business conditions for the manufacturing and services sector, fell 1 point to 47.1, figures showed yesterday. That is its lowest level since November 2020 and the fourth consecutive month below the crucial 50 mark separating growth from contraction. One of the few bright spots in the survey was that companies in all sectors reported a slight easing of cost pressures, price growth and supply chain constraints. However, prices charged for goods and services still rose at the sixth fastest rate since such data started in 2002. Jobs growth increased marginally from October but remained low compared with the past 18 months. Following a few months of falling price pressure in manufacturing and services, the October print shows an overall stabilisation said Jens Eisenschmidt, chief European economist at Morgan Stanley. However, German businesses, at the hub of Europe’s energy crisis, reported that manu...

Tariffs on UK electric cars.

  The European Commission has confirmed that it will continue with its plan to impose tariffs on electric cars exported between the UK and EU starting next year. This is due to the "rules of origin" requirement that mandates EVs traded across the English Channel to have 60% of their battery and 45% of their parts sourced from the EU or UK or face a 10% tariff. A senior Commission official, Richard Szostak, recently informed parliamentarians from the UK and EU that the bloc's battery investment has significantly declined, making the tariffs necessary to encourage domestic production. In 2022, the EU's share of global investment in battery production shrank from 41% to only 2% after the US offered substantial subsidies through its Inflation Reduction Act. Starting in 2024, car manufacturers in the UK will need to have 22% of their sales come from zero-emission vehicles, which means they may need to import EVs from the continent to meet this requirement. If EU carmakers ...