The state guarantees for UBS have ended, and it's repaid the liquidity aid. For Finance Minister Karin Keller Sutter, the Credit Suisse case is far from over.

 «As of today, the federal government and the taxpayers no longer bear any risk about the state guarantee,» enacted for UBS's takeover of Credit Suisse, Federal Councillor and Finance Minister Karin Keller-Sutter said at a media conference in Bern on Friday. «It also makes the emergency law irrelevant.»

Of the federal government's public liquidity backstop (PLB), 70 billion francs ($80 billion) was drawn by UBS at the very beginning. «That's a relatively large amount, considering a total of 200 billion was available,» Keller-Sutter said. She added that UBS had already transferred all the money back or would pay it back.

Voluntary Termination Sought

«UBS made this decision on its initiative,­» and had a substantial interest in suspending or repaying all outstanding liquidity support. «And that is, after all, a strong signal,» she said.

The possibility for the bank to terminate the deal was in the contract and its termination is absolutely in the interest of the Confederation. «I have in each case also brought this up emphatically in discussions with UBS,» she said, and ending the guarantees was a «win-win situation.»

Appeal to Common Sense

«UBS is a private company where too-big-to-fail rules apply.» With the bailout, the federal government hadn't allowed itself to be given any guarantees or influence on decisions by the bank's management when it came to jobs or locations, with a guarantee for the company's headquarters for a certain period the only thing agreed upon.

Keller-Sutter trusts, to some extent, the sense of responsibility of the UBS management. «I assume UBS decision-makers aren't living behind the moon. Even in the private sector, you have to rely on the public to understand what they are doing,» she said.

UBS also has to take the political landscape into account and has a responsibility to society, other companies, and politicians, she said.

Pulling All-Nighters

Looking back at the March bailout, the minister's frustration was visibly clear. «We've been beating our brains out all night because a bank made bad decisions over the years and didn't take responsibility.» The result was a loss of confidence and a bank run. «You can't regulate decency,» the finance minister said.

Resolving the crisis in March couldn't have been done any other way. «I have the impression that it wasn't clearly understood by the public what a collapse of Credit Suisse would have meant.» Companies would have gone bankrupt, payments wouldn't have been made, and the economic consequences would have been immense. «The situation was dramatic.»

More Tools for Finma?

«When you avert a loss, you don't win a pot of gold,» and there are no winners and losers in such a situation. «I was grateful that we had a solution. But we didn't know if it would work.» She expressed certainty that any other solution in March would also have required emergency legislation, along with guarantees and liquidity.

Looking ahead, there's certainly a need to review the resources available to the supervisor. This is an important point, and there are plans to compare Finma with regulators in other countries.

AT1 Write-Offs Contractually Regulated

In the final analyses, it will be necessary to determine with a cool head what the right steps are. «You can't completely eradicate the problem,» and the issue of supervision is certainly an important point, but not every risk can be regulated away.

Regarding AT1 bonds, Keller-Sutter points out the possibility of the value of these securities being redeemed was regulated in the contracts, and part of the return and risk profile. «And that's, after all, the difference between Confederation bonds and AT1 bonds.» Of course, she feels sorry for the people who lost money, «but I also say this as a liberal politician: there's no economy without risks.»