Explanation:
The correct answer is C.
During the March 2023 banking crisis, the Swiss government and the financial regulator (FINMA) utilized emergency legislation to facilitate the immediate acquisition of Credit Suisse by UBS. A critical and controversial aspect of this emergency action was the decision to bypass the standard requirement for shareholder approval, allowing the merger to proceed rapidly over a single weekend to prevent systemic contagion. Furthermore, FINMA used its authority to mandate the complete write-down of approximately CHF 16 billion of Credit Suisse's Additional Tier 1 (AT1) contingent convertible bonds (CoCos) to zero.
A is incorrect. While the Swiss National Bank (SNB) provided substantial liquidity assistance and the government offered loss guarantees for certain assets, the resolution was structured as a state-backed merger with UBS rather than a traditional, direct government-funded bailout or nationalization.
B is incorrect. Emergency laws were explicitly invoked to bypass shareholder approvals. Waiting for a standard shareholder vote would have delayed the rescue, potentially leading to a catastrophic collapse of the bank.
D is incorrect. The regulators did not suspend banking activities. A core objective of the emergency weekend rescue was to ensure that Credit Suisse branches would open and operate as normal on Monday morning to maintain market confidence and continuous service.
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Q.5621 In the wake of the crisis faced by Credit Suisse in 2023, the Swiss regulators took decisive action to prevent further destabilization of the financial system. How did the Swiss regulators utilize their authority under Swiss emergency law to facilitate the rescue of Credit Suisse?
A
By enforcing a government-funded bailout to provide immediate liquidity to Credit Suisse.
B
By mandating that shareholder approvals were necessary before any merger or write-down procedures.
C
By using their extended powers to trigger the full write-down of CoCos, thus eliminating the need for shareholder approvals for the rescue.
D
Swiss regulators implemented a temporary suspension of all banking activities to assess and devise a comprehensive recovery plan for Credit Suisse.
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