The Handling of the Credit Suisse Failure in Light of the FSB’s Key Attributes for Global Systemically Important Banks

Abstract On 19 March 2023, the Swiss authorities announced that UBS would acquire its failing competitor Credit Suisse in a state-facilitated merger to avoid its resolution. What is seen by some observers as a blunt violation of international standards warrants an objective and balanced assessment. This article provides such an assessment, contrasting the measures taken on 19 March 2023 with alternative courses of action contemplated by the Swiss authorities and evaluating their outcome in light of the international framework devised for resolving global systemically important banks—the Key Attributes of the Financial Stability Board. The assessment shows that the handling of Credit Suisse’s failure was far from a bailout like those seen during the global financial crisis of 2007-2008. While the Swiss authorities chose not to apply their legal powers to put Credit Suisse into resolution, many aspects of the resolution framework fulfilled their intended purpose. Nevertheless, the article points to three key lessons for the further development of global resolution frameworks: (1) avoiding the risks associated with creating yet bigger banks should become an explicit objective of resolution planning; (2) preserving strategic optionality in resolution planning will significantly enhance the chances of successfully deploying resolution actions; and (3) resolution planning as well as a credible public sector backstop must cater for the ample funding needs during and after the resolution of global systemically important banks.