The legacy of the collapse for Zurich

A financial centre with one global bank

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. That rivalry had given the city two competing employers for bankers, two sources of credit for Swiss companies, two gateways to the international capital markets and two institutions with a stake in the political and cultural life of the city. The Finanzmuseum in Zurich reacted to the takeover by noting that one of Switzerland’s two big banks had become history in 2023 and that its exhibition had to be rewritten. It also recalled that the foundation of the Kreditanstalt in 1856 had laid the foundation of the financial centre of Zurich.¹ The disappearance of Credit Suisse therefore marks the end of an institutional pattern that had existed since the nineteenth century.

The concentration raises three questions that will occupy Zurich for years. The first concerns competition. In several segments of the Swiss market, including corporate lending, custody for independent asset managers and the capital markets business with Swiss issuers, UBS now holds a position without a domestic rival of comparable size. The cantonal banks, above all the Zürcher Kantonalbank, the Raiffeisen group and foreign banks with a Swiss presence compete in many of these segments. None of them offers the full range of international services that Credit Suisse provided. The parliamentary investigation committee accepted the takeover as appropriate in the acute situation while noting that a solution with a foreign bank might have been preferable for competition in the long term.² The second question concerns systemic risk. The Swiss economy now depends on the stability of one global bank whose balance sheet is large in relation to the country’s gross domestic product, and whose failure would confront the Confederation with the same choices as in March 2023 with no domestic buyer available. The debate on the capital requirements for UBS, which dominated Swiss financial politics from 2024 to 2026, flows directly from this situation and is treated in the following chapter.

The third question concerns reputation and legal certainty. For decades the Swiss financial centre had presented itself to foreign clients and investors as a place where contracts are honoured, property is protected and the state acts predictably under law. The weekend of March 2023 tested that image. The sale of a large bank without a shareholder vote, the subordination of bondholders to shareholders and the use of an ordinance adopted on a Sunday evening seemed to many foreign investors incompatible with the rule of law. For investors in Asia, where the instruments had been widely distributed, the write-down became a test case for the reliability of Swiss law. The judgment of the Federal Administrative Court of October 2025 has partly restored confidence in the Swiss courts, because it showed that an independent judiciary would review the acts of the executive even in a crisis. Whatever the Federal Supreme Court decides, the litigation itself demonstrates that the institutions of the rule of law function.

Lessons for law and supervision

The collapse also left specific legal lessons, several of which the following chapter develops in detail. The first concerns liquidity. The run on Credit Suisse showed that a bank could lose deposits of more than ten billion francs a day in the era of digital banking, and that its eligible collateral could be exhausted before any resolution could begin. The SNB’s chairman drew the conclusion that banks must prepare sufficient assets for central bank facilities and that an effective public liquidity backstop is indispensable.³ The second lesson concerns supervision. Both FINMA and the parliamentary committee found that the supervisor had lacked powers or had used them too cautiously, which gave rise to the demands for a senior managers regime, fines and stricter governance rules.⁴ The third concerns emergency law. The Federal Council’s reliance on Articles 184 and 185 of the Constitution for measures of this magnitude raised the question of whether Parliament should adopt statutory powers in advance, so that the government would not have to improvise the legal basis of a rescue over a weekend. The fourth lesson concerns contingent capital. The ambiguity of the viability event clauses, which the Federal Administrative Court and its critics interpreted in opposite ways, has shown that the conditions for a write-down must be drafted with precision and anchored in statute if they are to work in a crisis.

For the practitioner in Zurich, the collapse has more immediate consequences. Legal advice on bank capital instruments must now include a careful analysis of trigger clauses and of the statutory write-down powers of the supervisor. Wealthy clients and their advisers have good reason to consider the risk of concentrating assets with a single institution, since the number of large Swiss custodian banks has fallen. Independent asset managers that had used Credit Suisse as custodian had to reorganise their relationships during the integration. Litigation arising from the collapse has kept law firms in Zurich busy since 2023, from the AT1 appeals and the proceedings on the exchange ratio before the Commercial Court to the bonus litigation and the investment arbitration in which Switzerland is the respondent. The legal after-effects of the collapse are thus becoming a chapter in the history of the Zurich legal profession as well.

A comparison with Geneva

The companion volume on Geneva describes a financial centre in which private banks owned by partners with unlimited liability long set the tone. That model rested on the personal responsibility of the owners and on a conservative approach to risk that avoided large investment banking operations. The Geneva private banks came through the crisis of 2023 without damage and gained clients from the uncertainty surrounding Credit Suisse.⁵ The comparison should not be pushed too far, since Geneva also depends on the stability of the large banks and on the reputation of Switzerland as a whole. It nevertheless illustrates that the collapse of Credit Suisse was the failure of a particular business model, one that combined a Swiss wealth management franchise with a global investment bank under a governance that could not control the risks of the latter. The traditional strengths of the Swiss financial centre, discretion, stability and long-term client relationships, survived the collapse.

Notes

1. Finanzmuseum (Zurich), “Bye bye Credit Suisse – An era of over 160 years comes to an end”, https://www.finanzmuseum.ch/en/home/blog/credit-suisse.html. The museum displays a share certificate of the SKA from 1912. Its blog gives the year of foundation both as 1856 and, apparently in error, as 1865. ↩
2. Watson, 20 December 2024 (cited above). ↩
3. Jordan, speech of 1 November 2023 (cited above). ↩
4. FINMA, press release of 19 December 2023 (cited above); PUK report, summary (cited above). ↩
5. finews.asia, “Pictet: Lower Profits Despite Flood of New Money”, 31 August 2023, https://www.finews.asia/finance/39961-pictet-less-profit-more-new-money-1h23-assets-under-management, reporting net new money of more than 15 billion francs in the first half of 2023 and noting that Pictet was likely to have benefited from the run on Credit Suisse in March; finews.com, “Lombard Odier Sees 2024 As a Year to Integrate New Recruits”, 15 February 2024, https://www.finews.com/news/english-news/61385-lombard-odier-results-2023-hubert-keller-english, quoting record levels of assets brought in by new clients in 2023. The companion volume on Geneva discusses the structure of the Geneva private banks in detail. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.