Switzerland's major financial institutions, UBS and Credit Suisse, have encountered various challenges throughout the years.
- 2008 Financial Crisis: UBS experienced considerable losses resulting from its exposure to subprime mortgage securities. The Swiss government intervened, supplying a $60 billion bailout to stabilize the bank. Despite this aid, UBS had to write down billions in assets, and top executives did not receive bonuses.
- Subprime Mortgage Scandal: UBS faced a $780 million fine in 2009 due to its involvement in the sale of subprime mortgage securities. The bank cooperated in the investigation of other financial institutions, and top executives forfeited bonuses.
- Interest Rate Manipulation: UBS agreed to a $1.5 billion fine in 2012 and assisted in the investigation of other banks for attempting to manipulate benchmark interest rates. Executives forfeited bonuses in relation to the scandal.
- Tax Evasion Scandal: In 2009, UBS was embroiled in a US tax evasion scandal, resulting in a $780 million fine. The bank also disclosed thousands of US customer names to authorities, and top executives lost bonuses.
- Money Laundering Scandal: Swiss financial regulators fined UBS $40 million in 2019 due to shortcomings in the bank's anti-money laundering measures. Executives did not receive bonuses linked to the scandal.
UBS has since prioritized risk management and compliance investments to regain its reputation as a reliable financial institution. The necessity for accountability and transparency in the financial services industry is evident, as executives must be held liable for their actions, and banks must operate ethically and transparently.
Both UBS and Credit Suisse have faced challenges like the 2008 financial crisis, subprime mortgage securities exposure, benchmark interest rate manipulation, and inadequate anti-money laundering controls. The Swiss government's $60 billion bailout has helped stabilize UBS, but it came at a cost to taxpayers. Both banks must work towards promoting competition and stability in the financial services industry while being aware of the concerns about their size and market dominance.
The difficulties encountered by UBS and Credit Suisse and the Swiss government's assistance emphasize the significance of responsibility and accountability in the financial services industry. Banks must operate ethically and responsibly, and regulatory bodies must monitor them to protect national interests and promote competition and stability.
UBS and Credit Suisse have taken measures to regain their status as trusted financial institutions. Nevertheless, rebuilding trust requires time and ongoing effort, and the banks must maintain transparency and ethical conduct in the future.
Author: Pooyan Ghamari, Swiss Economist & Visionary