The decline Credit Suisse continues to stir emotions. However, former finance professor Martin Janssen sees a positive side to the end of the bank, as he surprisingly explains in an interview with finews.tv. As a witness who has followed the bank's development over the past 50 years, he can also assess the impact of Credit Suisse's disappearance on the Swiss financial sector in a nuanced way.
For Martin Janssen, emeritus finance professor at the University of Zurich, the end of Credit Suisse (CS) is a «sad story,» but it also has its positive aspects. He emphasizes in the interview with finews.tv (in German) that it shows how a company endowed with so many privileges, like CS, can indeed fail in a market economy.
Janssen has followed the development of the former Schweizerische Kreditanstalt (SKA) and later CS more closely than almost anyone else over the past 50 years. He is a rare witness who still remembers that during his student days, this bank was «a beacon.»
«Everyone wanted to work there; SKA was a very attractive company, and many bank employees lectured at the university,» recalls the finance expert with some wistfulness.
In the last ten years, the decline of CS has been visible everywhere, although the people on the front line did «incredibly good work» – in asset management or corporate banking, Janssen continues. But with its leadership and a «peculiar board of directors,» CS could never have survived.
«The question is more whether conditions should have been created early on to allow a Credit Suisse Switzerland to survive,» the former finance professor points out.
For him, it is clear: «CS is missing everywhere. The financial center has lost attractiveness and competence, and Switzerland is worse off without a (healthy) CS than before.»
Finma Failed Spectacularly
The former finance professor takes a hard line with the Swiss Financial Market Supervisory Authority (Finma): «There are basically two principles in supervision: regulations and control, as well as transparency and competition. Finma pursued the former intensively with CS and failed spectacularly.»
«We must finally accept that we are not able to assess how well a bank is doing. We should leave that to the market,» explains Janssen, as the market has numerous pieces of information to assess the quality of a company – such as the development of Credit Default Swaps (CDS), implied volatility, and certain options prices. «We should allow this information to become transparent to the market. But Finma has prevented this in the past,» says Janssen.
Many Large Risks for UBS
He does not consider large risks inherently bad. «I very much hope that UBS takes on many large risks and manages them successfully to make money. If politics now says it wants to minimize UBS's risks, then it has not understood the banking business,» concludes Janssen.
Instead, it is about creating sensible framework conditions to generate profit with capital and risks, ultimately leading to greater value creation for Switzerland.
False Security
«An internationally active bank must be well diversified. It would therefore be wrong to cut it apart and think that doing so would make it safer. Anyone who claims this has not understood what it is about,» says Janssen.
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