Karin Keller-Sutter and the UBS – On the Danger of Conflict

Summary

Markus Somm analyzes in his column how Switzerland is losing its liberal compass through political conflicts with the business sector. Using the UBS crisis as an example, he demonstrates how excessive capital requirements imposed by Karin Keller-Sutter led to a takeover by an American bank – a failure of liberal economic policy with serious consequences for Switzerland.

People

Topics

Detailed Summary

The article paints a critical picture of Swiss economic policy through three historical parallels. First, the Swissair crisis is mentioned: Aviation Minister Kaspar Villiger, a liberal member of the Free Democratic Party, rejected a federal guarantee of one billion francs in 2001 – true to the principle that the state must not prop up companies. This decision led to the collapse of the airline.

The second story addresses the Credit Suisse crisis: Although SNB President Thomas Jordan and Finance Minister Karin Keller-Sutter initially sought solutions, no guarantee was provided. CS disappeared into UBS – initially this was celebrated as a pragmatic Swiss solution.

The third and decisive story criticizes how political pressure against high bank executive salaries led to extreme regulations. Inspired by media and political criticism of Sergio Ermotti's salary, Karin Keller-Sutter massively tightened capital requirements for banks. This made UBS so unprofitable that it was taken over by an American financial conglomerate for a pittance.

Somm argues that Switzerland has thereby lost its status as an internationally significant financial center and employer. Swiss talent is fleeing, tax revenues are declining, and the state is becoming poorer. The liberal FDP party has abandoned its core principles and allowed itself to be guided by left-wing media debates.

Key Points

• Switzerland is losing its liberal compass through political conflicts with the business sector
• Excessive regulation and populist reactions to executive salaries destroy competitive companies
• The UBS takeover by an American company is the result of political mistakes, not economic necessity
• Political and business elites must communicate with each other again to prevent further losses
• Switzerland has already lost too many outstanding companies through regulatory excess
• A paradigm shift is still possible, but time is running out

Metadata