Switzerland's parliament has rejected the government's proposed 109 billion Swiss francs ($120.82 billion) aid for Credit Suisse's merger with UBS, leaving the troubled bank's hastily arranged rescue without a largely symbolic parliamentary blessing. The lower and larger chamber of parliament, which had already rejected the proposals in a late-night session on Tuesday, pushed back again on Wednesday, despite the upper house approving the government's contribution to the rescue package. The vote marks a symbolic rebuke for the authorities, whose decision to largely bypass the nation's legislative has angered many politicians.
The government's commitment, made using emergency law, cannot be overturned, but lawmakers who backed an approval of the deal voiced concern about Switzerland's image. "It doesn't really matter what we decide in detail, but it would really send a bad signal if these loans were rejected," said Eva Herzog, a member of the Council of States. Following a day of heated debates held in the country's four national languages, that continued into early morning hours, the upper house passed changes aimed at winning over the sceptics, including a proposal for Switzerland's federal government to draft an amendment to the country's Banking Act.
The amendment aims to reduce the risks posed by systemically relevant banks, such as Credit Suisse and UBS for Switzerland, by raising capital requirements and restricting bonuses. Addressing parliament before the vote on Wednesday, finance minister Karin Keller-Sutter warned lawmakers to consider what message their rejection of the rescue would send to the world. "What signal do you want to give internationally, are the institutions reliable, do you value financial market stability in a place where you already have a financial center with a certain importance?"
Lawmakers were recalled to the country's capital, Bern, for the rare extraordinary session to discuss the Swiss government's open chequebook response to a collapse that many in the country have blamed on Credit Suisse's top management. The government invoked Swiss emergency law so that a sub-group of six members of parliament approved the financial commitment on behalf of the legislative body, to the ire of the almost 250 lawmakers left without a say. "The use of emergency law has reached a level in the last three years that is beginning to annoy me," said Hansjoerg Knecht, a member of Parliament's upper house.
Last month's shotgun marriage which saw the bank taken over by rival UBS for 3 billion Swiss francs and propped up with more than 250 billion Swiss francs in guarantees and support has drawn widespread criticism. The rejection of the aid package by the Swiss parliament is seen as a sign of deep public frustration over the banking industry's repeated missteps. Credit Suisse has been grappling with the fallout from the collapse of supply chain finance firm Greensill Capital, which has tarnished its reputation and led to a raft of senior departures.