The Big Banks: Rise, Crisis and Consolidation — a part of the book Zurich as an International Financial Centre by Dr Alexander Ressos.
Part G examines the concentration of Swiss banking at Paradeplatz, the two crises that shook it and the regulatory answers they produced. In the 1990s a wave of mergers left Zurich with two global universal banks whose balance sheets were several times the size of the Swiss economy. The first of them needed a state rescue in 2008. The second disappeared in a weekend in March 2023, when the authorities arranged its takeover by the first. Between these two events the United States and the OECD ended banking secrecy for foreign clients, and Switzerland built one of the most demanding too-big-to-fail regimes in the world.
Chapter I describes the consolidation of the 1990s, the formation of the new UBS in 1998 and the rise of Credit Suisse Group. Chapter II analyses the losses of UBS in the American mortgage market and the rescue package of October 2008. Chapter III traces the end of banking secrecy for foreign clients, from the UBS case in the United States through the programme for Swiss banks to FATCA and the automatic exchange of information. Chapter IV sets out the too-big-to-fail regime of 2011 and the way it was applied. Chapter V reconstructs the collapse of Credit Suisse, the emergency ordinance, the write-down of the AT1 instruments and the litigation that followed. Chapter VI presents the reforms proposed after 2023 and their parliamentary treatment as at September 2026.
The part closes with a financial centre that has one global bank and a regulatory framework still being rebuilt around it. Part H turns to the businesses that give Zurich its breadth beyond the big banks: the capital market, asset management and private banking.
This part belongs to Zurich as an International Financial Centre by Dr Alexander Ressos, published here in full, section by section.
Consolidation in the 1990s: UBS and Credit Suisse Group — overview and summary
Anyone who walked from the main station to the lake along the Bahnhofstrasse in 1990 passed the head offices or principal Zurich premises of five banks that Swiss statistics classed as big banks. Read more Zurich · The Big BanksThe Swiss banking landscape around 1990
At the end of the 1980s Swiss banking statistics distinguished between big banks, cantonal banks, regional and savings banks, loan associations, Raiffeisen banks, private bankers and… Read more Zurich · The Big BanksThe real-estate crisis of the early 1990s
The real-estate crisis of the early 1990s was the most severe domestic banking crisis in Switzerland since the 1930s. Its roots lay in the second half of the 1980s. Read more Zurich · The Big BanksThe end of the banking cartel
While the property market was still booming, the federal competition authorities had begun to examine the agreements through which Swiss banks coordinated their prices. Read more Zurich · The Big BanksCredit Suisse: from Kreditanstalt to Credit Suisse Group
The Kreditanstalt was the first of the Swiss big banks to commit itself to American investment banking. Read more Zurich · The Big BanksThe Swiss Bank Corporation and the Anglo-American road
The Swiss Bank Corporation chose a different path to the same destination. According to the Historical Dictionary, the real-estate crisis and the deregulation of the Swiss banking sector at the… Read more Zurich · The Big BanksThe Bankgesellschaft under pressure: Martin Ebner and the governance fight
While the Bankverein expanded abroad, the Bankgesellschaft became the stage of the most publicised shareholder conflict in Swiss corporate history. Its protagonist was Martin Ebner. Read more Zurich · The Big BanksThe merger of 8 December 1997
On Monday, 8 December 1997, the Union Bank of Switzerland and the Swiss Bank Corporation announced that they would merge. The combined bank was to be called UBS. Read more Zurich · The Big BanksLong-Term Capital Management and the price of integration
The first year of the new UBS brought a crisis that exposed the weaknesses of the merged risk management. Read more Zurich · The Big BanksThe transatlantic bets of 2000: PaineWebber and DLJ
Two years after the merger, UBS made the largest acquisition in its history until then. Read more Zurich · The Big BanksGovernance and remuneration
The consolidation of the 1990s transformed the governance of Swiss big banks. The boards of the old banks had been composed largely of Swiss industrialists, politicians and officers who represented… Read more Zurich · The Big BanksThe legacy for the Zurich financial centre
The most visible legacy of the 1990s was the constellation that dominated the Zurich financial centre for a quarter of a century: two global banks, UBS and Credit Suisse, with their head offices at… Read more Zurich · The Big BanksThe 2008 crisis and the rescue of UBS — overview and summary
On the morning of Thursday, 16 October 2008, before the markets opened, the Federal Council, the Swiss National Bank and the Swiss Federal Banking Commission announced a package of measures designed… Read more Zurich · The Big BanksThe ambition: UBS’s growth strategy, 2005–2007
The UBS that entered the crisis was the product of the merger of the Union Bank of Switzerland and the Swiss Bank Corporation in 1998 and of the acquisitions described in chapter G.I, among them the… Read more Zurich · The Big BanksThe anatomy of the losses
The largest part of the losses arose from a product whose name suggested maximum safety. Read more Zurich · The Big BanksSelf-examination and self-help, 2007–2008
UBS first tried to repair its balance sheet by its own means. On 10 December 2007, together with the write-downs of about USD 10 billion, it announced a set of measures that it expected to strengthen… Read more Zurich · The Big BanksThe rescue of 16 October 2008
The authorities had begun to prepare long before the crisis reached its climax. When the interbank market dried up on 9 August 2007, the National Bank and the Banking Commission activated the crisis… Read more Zurich · The Big BanksUnwinding the rescue
The Confederation’s investment was short-lived. On 19 August 2009 the Federal Council decided to convert the mandatory convertible notes and to sell the resulting shares. Read more Zurich · The Big BanksAccountability
The first official account of the causes of the losses came from the supervisor. On 30 September 2008, two weeks before the rescue, the Banking Commission completed a summary report on its… Read more Zurich · The Big BanksRemuneration and the political response
The remuneration conditions attached to the rescue were extended to the whole financial sector through a FINMA circular. Read more Zurich · The Big BanksLegacy: the lessons that shaped too big to fail
The rescue of UBS left three lessons that later shaped Swiss regulation. The first concerned capital. Read more Zurich · The Big BanksThe end of banking secrecy for foreign clients — overview and summary
Between the summer of 2008 and the autumn of 2018, the Swiss financial centre abandoned a proposition that had shaped its business for most of the twentieth century. Read more Zurich · The Big BanksCross-border private banking before 2008
The cross-border private banking business that Zurich and Geneva had built after the Second World War rested on a combination of economic and legal features. Read more Zurich · The Big BanksThe UBS case
The investigation that brought down Swiss banking secrecy towards the United States began with an individual. Read more Zurich · The Big BanksThe decision of 13 March 2009 and the grey list
The UBS case unfolded against a changing international background. In the autumn of 2008 the financial crisis had shifted the attention of the leading economies to public revenues, and tax havens… Read more Zurich · The Big BanksAdministrative assistance after 2009
The procedural rules for implementing the new treaty clauses were at first laid down in an ordinance. Read more Zurich · The Big BanksThe prosecutions of other banks
When UBS withdrew from its cross-border business with American clients in 2008, thousands of account holders looked for another bank. Some found one. Read more Zurich · The Big BanksGermany: tax CDs and the failed withholding tax agreement
The relationship with Germany, which Part K of this book examines in detail, followed a different path. Its point of departure was the purchase of stolen data. Read more Zurich · The Big BanksFATCA
While the prosecutions dealt with the past, the United States legislated for the future. Read more Zurich · The Big BanksThe automatic exchange of information
FATCA had shown that automatic reporting of foreign accounts was technically feasible. Read more Zurich · The Big BanksThe “Weissgeldstrategie”, voluntary disclosures and domestic secrecy
As the defences of banking secrecy fell one after another, the Federal Council sought to give the financial centre a positive programme. Read more Zurich · The Big BanksConsequences for Zurich’s client base and business models
The transformation of the years 2008 to 2018 changed the economics of Swiss private banking without destroying it. Read more Zurich · The Big BanksThe practitioner’s perspective
For practitioners in Zurich, the transformation of the past fifteen years remains part of daily work. Read more Zurich · The Big BanksToo big to fail: the regime of 2011 and its application — overview and summary
The rescue of UBS in October 2008, described in the preceding chapter, left Switzerland with a problem that no emergency measure could solve. Read more Zurich · The Big BanksThe problem named: from the rescue of UBS to the expert commission
The phrase “too big to fail” had circulated in American banking policy since the rescue of Continental Illinois in 1984, but the crisis of 2008 gave it a new urgency across the world. Read more Zurich · The Big BanksThe legislation of 2011: Articles 7 to 10a of the Banking Act
The Federal Council moved quickly. On 13 October 2010 it instructed the finance department to prepare a consultation draft, and on 22 December 2010 it opened the consultation. Read more Zurich · The Big BanksDesignation by the Swiss National Bank
The transfer of the designation power to the Swiss National Bank gave the central bank a formal role in banking regulation that it had not possessed before. Read more Zurich · The Big BanksCapital requirements: going concern and gone concern
The capital regime adopted in 2012 translated the commission’s three layers into law. Read more Zurich · The Big BanksLiquidity: from the Liquidity Ordinance to the special requirements
Liquidity was the second field of the expert commission’s package, but for several years it received less public attention than capital. Read more Zurich · The Big BanksResolution planning: emergency plans, recovery plans and resolvability
The capital and liquidity requirements aim to make failure less likely. Resolution planning deals with the case in which failure occurs nonetheless. Read more Zurich · The Big BanksBasel III and its final package
The Swiss TBTF regime was built on top of the international Basel standards. When the Basel Committee published Basel III in December 2010, Switzerland was among the first jurisdictions to implement… Read more Zurich · The Big BanksThe periodic reports of the Federal Council
The biennial reports under Article 52 of the Banking Act provide a running commentary on the regime by its author. Read in sequence, they show a pattern. Read more Zurich · The Big BanksThe regime tested: March 2023
The collapse of Credit Suisse is the subject of the next chapter, and only the aspects that concern the design of the TBTF regime are discussed here. Read more Zurich · The Big BanksComparisons: the European Union and the United Kingdom
Because the Swiss regime was developed in parallel with the resolution frameworks of the European Union and the United Kingdom, the comparison illuminates both its strengths and its peculiarities. Read more Zurich · The Big BanksLegacy: TBTF in a two-bank and then a one-bank financial centre
When the Banking Act was amended in 2011, the TBTF regime addressed two banks of broadly comparable size, each with its head office in Zurich. Read more Zurich · The Big BanksThe collapse of Credit Suisse (March 2023) — overview and summary
On the evening of Sunday, 19 March 2023, the President of the Swiss Confederation and the head of the Federal Department of Finance appeared before the press in Bern together with the leaders of the… Read more Zurich · The Big BanksThe long decline
The Credit Suisse that entered the twenty-first century was the product of an ambition that had taken shape after the Chiasso scandal of 1977. Read more Zurich · The Big BanksThe week of 13 to 19 March 2023
The final crisis of Credit Suisse began far from Zurich. On 10 March 2023 the Californian authorities closed Silicon Valley Bank, a mid-sized lender to technology companies whose depositors had… Read more Zurich · The Big BanksThe emergency ordinance and the transaction
The legal architecture of the rescue rested on an ordinance of the Federal Council adopted on 16 March 2023 and amended on 19 March at 20.00 hours, while the press conference was still under way. Read more Zurich · The Big BanksThe write-down of the additional tier 1 instruments
Additional tier 1 instruments occupy a narrow space between debt and equity. They are perpetual subordinated bonds that count towards a bank’s going-concern capital because they absorb losses before… Read more Zurich · The Big BanksParliament, the investigation committee and the reports of the authorities
The Federal Assembly had no part in the decisions of the weekend. Its Finance Delegation, a joint body of members of both chambers, approved the guarantee credits in advance under the urgency… Read more Zurich · The Big BanksIntegration, the end of the guarantees and the litigation of shareholders
UBS completed the acquisition on 12 June 2023, which was also the last day of trading of Credit Suisse shares on the SIX Swiss Exchange and of its American depositary shares in New York. Read more Zurich · The Big BanksThe legacy of the collapse for Zurich
For more than a century the financial centre of Zurich had been shaped by the rivalry of two large banks whose head offices faced each other across the Paradeplatz. Read more Zurich · The Big BanksReforms after Credit Suisse — overview and summary
The weekend of 19 March 2023, described in the preceding chapter, ended with a merger that no one in Zurich had planned and few had thought possible. Read more Zurich · The Big BanksThe starting point: a regime tested and found wanting
The too-big-to-fail regime that entered into force in 2012, described in an earlier chapter of this Part, rested on two pillars. Read more Zurich · The Big BanksThe Federal Council’s report on banking stability of 10 April 2024
The Banking Act obliges the Federal Council to review the too-big-to-fail provisions periodically and to report to Parliament. Read more Zurich · The Big BanksThe Parliamentary Investigation Committee and the political climate
In June 2023 the Federal Assembly set up a Parliamentary Investigation Committee, an instrument used only a handful of times in the history of the federal state, to examine the conduct of the… Read more Zurich · The Big BanksThe package of 6 June 2025
On 6 June 2025 the Federal Council announced how it intended to translate the report of April 2024 and the findings of the Parliamentary Investigation Committee into law. Read more Zurich · The Big BanksAccountability: the senior managers regime, remuneration and clawback
Capital was the subject that attracted the attention of markets. Accountability was the subject that attracted the attention of the public. Read more Zurich · The Big BanksNew powers for FINMA
For most of its existence FINMA has been an unusual supervisor by international standards. Read more Zurich · The Big BanksLiquidity: the lender of last resort, the Extended Liquidity Facility and the public liquidity backstop
Credit Suisse did not fail because its reported capital fell below the minimum. It failed because depositors and counterparties withdrew their money faster than the bank could turn its assets into… Read more Zurich · The Big BanksParliament, 2025–2026: from the committee room to the Council of States
The capital bill reached Parliament in the spring of 2026 after a year in which the political battle lines had become clear. Read more Zurich · The Big BanksThe reaction of UBS and the relocation debate
UBS has opposed the capital measures consistently since June 2025, with arguments that have remained stable while the figures have changed. Read more Zurich · The Big BanksInternational comparisons
Every participant in the Swiss debate has invoked international standards, each drawing different conclusions from them. Read more Zurich · The Big BanksOne big bank: concentration, competition and the domestic market
The reform debate has concentrated on UBS as a global bank. For many Swiss companies, households and pension funds, however, the more immediate consequence of the Credit Suisse collapse was the… Read more Zurich · The Big BanksLegacy and outlook
Three and a half years after the weekend of March 2023, the reforms after Credit Suisse have produced a substantial body of analysis and only a modest body of law in force. Read more