«La Chute», chronicle of a death foretold

In a fascinating investigative book, journalist Mathilde Farine takes a popular look at the reasons behind the Credit Suisse debacle in the spring.

On March 19, Switzerland was shocked to learn that its number-two bank, Credit Suisse, had been taken over by the giant UBS. The deal, decided in the space of just one weekend, marked the end of a 167-year history for Switzerland's former banking flagship, a history initiated in 1856 by one of the founders of modern Switzerland, Alfred Escher. For financial journalist Mathilde Farine, this debacle is the consequence of a long descent into hell that began many years before. A journey she recounts in The Fall, published earlier this summer by Slatkine.

From the outset, the bank that would become Credit Suisse had very Swiss characteristics. Prudent and conservative, it lent wisely, offered comfortable but no-frills returns and built up healthy reserves. How, then, did this same institution sink so low? Mathilde Farine interviews a number of witnesses, specialists and big names in Swiss banking. And one conclusion is clear. Credit Suisse has certainly not been helped by external circumstances and the global context. But Credit Suisse «is the master of its own history and, to a large extent, responsible for its sad end».

Cowboys and mercenaries

The bank's early and relentless development in the USA changed what was intrinsically its soul, «putting bonuses and short-term profit above all other values». Its role as the eternal Poulidor of the Swiss banking world encouraged it to take risks that didn't always pay off. And her chronic inability to question herself prevented her from taking the decisions that could have saved her.

In The Fall, Mathilde Farine doesn't jargonize. She brings the general public into the gilded salons of Zurich's Paradeplatz to meet the rich, powerful and arrogant men whose portraits she paints without complacency. It's a part of the country's history that she recounts to citizens who haven't necessarily followed all the episodes of this long soap opera.

Risks not yet eliminated

Mathilde Farine isn't kidding herself either. The failure of Crédit Suisse also raises questions about the regulations put in place by the Swiss government after the UBS bailout in 2008. Switzerland can no longer afford to delude itself: it now seems impossible to let a systemically important institution go bankrupt. That would certainly have led to «a global fire and a global financial crisis», she notes, echoing the words of Marlene Amstadt, President of Finma, the Swiss financial regulator.

For the writer, it's becoming urgent to ask questions about what we want. What all the major banks have in common is that they «carry within them the ingredients of cataclysm». Mathilde Farine is not preaching to the choir. But her book does have the merit of reminding us that there will never be zero risk in the world of big banks. As a «small country with a disproportionate and, by its very nature, threatening bank», Switzerland needs to be prepared. Otherwise, it risks seeing «a violent thunderclap (...) strike down our peaceful economic prosperity».

Write to the author: sandrine.rovere@leregardlibre.com

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