The Swiss financial website insideparadeplatz.ch, gives interesting background information on why the Swiss National Bank was forced to intervene in Credit Suisse with $54 billion, what they call “the largest bailout in history” in Switzerland. (Formally, the bailout of UBS in 2008 was larger, but it included taxpayers’ money, whereas this time it is only central bank money.)
An initial blow was given by the SEC which, on March 9, blocked the publication of CS’s financial report. Why? Some irregularities were mentioned, but one can assume that they were so big, and with CS being a convicted felon in this field, that the SEC did not feel like allowing it this time. However, the action was a clear blow to CS’s credibility.
The second blow came from the Saudi government (9.8% shareholders), as they refused to step in to the bailout. The head of the Saudi National Bank, Ammar Abdul Wahed Al Khudairy, in an interview with Bloomberg TV on Wednesday, categorically ruled out any further aid. Although Bloomberg cites “regulatory” reasons, this is nonetheless highly interesting, given the re-positioning of Riyadh away from the collapsing Western system—especially because bailing out Credit Suisse meant bailing out Wall Street.
And the third aspect: According to insideparadeplatz, “orders” were given to the Swiss National Bank (SNB) to bailout CS, given the high exposure of CS to American banks. CS can now meet its obligations in dollars, thanks to the swap agreement between the Fed and the SNB.
