Swiss Minister flags legal concerns in global bank closures

Swiss Finance Minister Karin Keller-Sutter emphasised the need for international financial authorities to address legal risks in the potential winding up of global banks, Reuters reported on Wednesday.

In an interview with the Frankfurter Allgemeine Zeitung, she mentioned discussions with the Financial Stability Board and other finance ministers, including Germany’s Christian Lindner.

Keller-Sutter highlighted that winding up a bank might be hindered by international legal risks, citing Credit Suisse’s collapse last year as a clear example. She expressed doubts about the effectiveness of a “bail-in” strategy, particularly in the US.

She also stressed that systemically relevant banks should back their foreign subsidiaries with up to 100 per cent equity to manage these risks.

The Swiss government introduced measures for “too big to fail” entities in April following Credit Suisse’s takeover by UBS, which formally absorbed Credit Suisse’s parent company last week. S&P upgraded UBS Group AG’s outlook to stable from negative.