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Swiss parliamentarians have voted against a SFr109bn government-backed liquidity package underpinning UBS’s takeover of rival Credit Suisse, in a symbolic move indicative of swelling opposition to the deal.
Switzerland’s lower house on Wednesday afternoon voted down the government bill to authorise the bailout, repeating the results of an initial vote held on Tuesday night and rejecting a compromise proposal in a ballot that finalises parliament’s stance on the rescue.
However, the move comes too late to actually stop taxpayers’ money from smoothing the takeover of the two banks as parliament’s financial delegation, which exercises independent authority in such matters, ratified the government bailout in the absence of MPs earlier this month. Swiss MPs are volunteers who only formally sit for twelve weeks a year.
But the latest vote, held at the end of a special two-day recall of parliament, will nevertheless constrain the Swiss government’s future room for manoeuvre in aiding UBS and is likely to lead to more onerous oversight of the bank on matters such as bonuses.
Members of the Federal Council — Switzerland’s seven-person executive — implored parliamentarians to support the takeover package they had engineered in a fraught 72-hour period last month.
The deal involves a SFr100bn ($111bn) liquidity lifeline from the Swiss National Bank and a SFr9bn government guarantee against losses incurred by UBS on the deal.
“Time was running out and the situation was deteriorating from hour to hour,” said Federal Council president Alain Berset in a speech to try and garner parliamentary support.
Credit Suisse’s collapse in March, on either Monday 20 or Tuesday 21, was a near certainty without government help, he said, “and would have caused an international financial crisis with devastating effects for our country”.
Berset promised a rigorous review of banking legislation by the government and castigated “erratic management” at Credit Suisse who “destroyed” the bank over several years and “did not learn the lessons of the last financial crisis, or assume responsibility”.
Members of the National Council — the lower house — voted 103 against the Federal Council’s intervention on Wednesday afternoon in Bern, with 71 in favour and eight abstentions.
An attempt by the Council of States, the upper house, to gain support for the government by appending a range of conditions to the approval, including measures on higher bank capital ratios and bonus restrictions, failed to shift lawmakers.
National councillors from the country’s two biggest parties, the rightwing populist Swiss People’s party (SVP) and the leftwing Social Democratic party (SP) voted en masse against the bailout.
Both parties have proposed tough new legislation.
The SVP, which controls a quarter of the seats in the National Council, said on Wednesday it would table a law in the future to force the break-up of any bank that was deemed “too big to fail”.
The SP, which controls a fifth of seats, is similarly critical of support for oversized banks. The party has tabled motions to ban bonuses at “systematically relevant” banks and to subject them to stricter capital requirements.
“Worthy promises” about fewer bonuses and stricter capital requirements from bankers and sympathetic politicians can no longer be tolerated, said party co-president Mattea Meyer. “We will not turn a blind eye. We will do everything we can to finally free ourselves from being held hostage by the big banks and financial markets.”
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