UBS and Credit Suisse next to each other
04.04.2023

When a Silicon Valley bank topples Credit Suisse.

From a Californian crisis in Zürich. How did we get here?

 

Once upon a time, there was a financial behemoth called Credit Suisse

Let's go back. In 1856, the SKA bank was founded. 

It is mainly active in corporate lending and will change its name to Credit Suisse. 

The bank developed its first branch network in Switzerland at the beginning of the twentieth century, and in 1940, the first foreign branch was opened in New York.

Until the early 2000s, Credit Suisse experienced considerable growth in its activities and assets. Despite this, its growth is not without reproach in terms of its ethics and governance. 

Its role during the Second World War, particularly at the expense of the Jewish community, tainted its history and a first financial scandal broke out in 1977 in the Chiasso affair. 

Despite internal warning signs, the company had a reprehensible control over its activities and was given criminal and financial penalties because of the establishment of a shell company in Lichtenstein. 

Despite this scandal, which damaged its reputation, Credit Suisse had nearly 85,000 employees worldwide at its peak. The bank was part of a small circle of international banks considered to be the most profitable. 

A global bank, it was also active in the insurance market, wealth management, leasing, etc.

It was therefore successful, but the lack of good governance caused it harm, again. 

What followed was a series of scandals, lawsuits and a game of musical chairs at its general assembly.

The subprime crisis, as well as the tax evasion of American citizens, led to billions in fines.

As a result, readjustments were made and the downsizing of staff all over the world was reduced.

In the early 2000s, its risky investment strategy took its toll with losses amounting to several billion francs. This loss was linked to the debacle of a US investment fund.

In recent years, Credit Suisse has published negative financial statements, the bank's share price has weakened, and it has not been able to restore its former reputation in the markets. 

Although its level of liquidity appears to be healthy, the bank remained in a weakened position in an uncertain economic and banking context...

 

SVB who?

Few of us heard about SVB until 2023. 

And yet, this bank would indirectly bring about the downfall of Credit Suisse.

The rise in interest rates decided by the US central bank, in order to counter inflation, prevented the bank's customers, mainly players and start-ups from the tech world, from obtaining loans on acceptable terms.

As a result, these same clients withdrew their assets to finance their projects, and SVB was forced to sell its portfolio bonds in order to have the necessary liquidity to cover these withdrawals. 

Unfortunately, the bonds in question no longer represented the same value as when they were purchased. Rising interest rates were also the cause.

The result? An accounting loss related to the forced sale of bonds and capital flight from its clients. 

To avoid a panic in the markets, the US authorities intervened quickly to guarantee the assets of the bank's customers. The worst was avoided, but the damage was done.

Since then, SVB has been taken over by its direct competitor. 

  

So what? What does this have to do with us?

Truth be told, the case of SVB is in no way similar to that of Credit Suisse. Banks of different sizes, on two different continents, one operating almost exclusively with the tech world... the ills of the SVB were peculiar to him.

However, in an interconnected financial world, one value that knows no borders is trust. The one dedicated to the entire banking sector was suddenly put to the test.

Banks are dependent on their reputation, on their ability to instill trust in their customers and investors. 

Credit Suisse had very little of this confidence. Its share price fell more violently than other banks...

 

The Saudi announcement. 

To make matters worse, one of the main shareholders (Saudi National Bank) announced that it did not want to invest further in the bank.

A press release that came at the worst possible time. Reasons other than financial were put forward but, once again, the damage was done.

Despite the reassuring words of Credit Suisse's management, despite the fact that SVB had nothing in common with the Swiss  bank, despite the actions taken by the SNB and  despite the commitment of thousands of employees, in Switzerland and around the world, the fate was sealed for the bank with two sails...

   

UBS.

UBS, the other Swiss banking giant, in collaboration with the country's political and financial authorities, reached an agreement to buy Credit Suisse. 

The worst will probably have been avoided, i.e. a total drop in confidence in the Swiss banking sector with a national and international spread, but there is no doubt that the image of the country and its institutions has suffered enormously. 

The professional future of thousands of employees is also at risk. 

If only the principle of good governance had been scrupulously respected; However, there were many warnings beforehand...

 

What about us? And you?

For the time being, nothing fundamentally changes. Neither for holders of a Credit Suisse or UBS account, nor for outstanding loans, whether in the form of a corporate loan or a consumer loan via one of the subsidiaries of the two banks.

If you have any doubts, please do not hesitate to contact us. Your advisor will be able to reassure you.

In these sometimes turbulent times, Milenia remains true to her values. 

Simplicity, responsibility, clarity and quality. These are all values that support our team in the management of your projects and in the allocation of responsible loans adapted to your financial reality. 

Even though we work to make your dreams a reality, caution is always required when putting together your file. In addition, we scrupulously respect the legal framework to ensure that your personal loan is a source of happiness and not worry.

So trust us. 

As Switzerland's leading credit player, we are a preferred partner of financial institutions in the market. 

We remain by your side, from  your credit application to the payment of your loan, and beyond.

 

 

 



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Since the Covid pandemic, companies have multiplied remote working methods. The most widely used is telecommuting. Two years later, has this method been successful?

 

Let's take a step back

During the lockdown, the world of work experienced a real shift.

Companies had to adapt and various means were put in place to ensure the continuity of services, sales, and the very functioning of the organization.

Do you remember?

The famous cardboard box filled with a computer, a mouse and a screen that the employees took home...

We somehow settled down somewhere in our apartment or our house.

The less fortunate had to sit on an old table at the back of their bedroom.

Children screamed in the background and parents had to juggle their work responsibilities with those of being a mother or father.

Ah... What wonderful memories!

In addition, the schedules became confused. There was no beginning and no end. We were already connected before, but now the workplace had invited itself into our home, into the family, into our home.

However, not everything had to be thrown away.

The doctor's appointment, the receipt of the Zalando package, the visit of the plumber... What required us to take time off or organize ourselves differently simply fit into his work schedule, on site.

Above all, no more time wasted on the road or on the train. We earned two hours of our living every day. That's no small feat...

We weren't the only ones. Hundreds of millions of people around the world, by obligation or freely, switched to this new way of working.

It was necessary to put in place state-of-the-art technological and IT infrastructures to enable more secure virtual exchanges of information via videoconferencing or e-mail.

It was necessary to set up a teleworking policy to give directives on working hours, the availability of employees and managers so as not to be too intrusive in private life.

Finally, regular reviews were required to assess the effectiveness of telework policies and gather feedback from employees.

The big winners? Zoom, Teams, Skype, Webex... It was a good time and the number of users exploded

 

Video conferencing platforms

In order to establish clear and effective communication channels, it is necessary to have instant messaging and video conferencing tools to maintain smooth communication between team members. This transition is being made by different players who bring specificities specific to each sector.

You may have seen that.

Some companies will use the Zoom platform, which allows simple video conferences with a discussion thread, which is easy to use and not very connected to other services.

Others will use Microsoft Teams or Webex, which offer more integrated and secure business solutions.

Skype and Google Meet round out the market leaders, at least in Europe.

 

And what about employers?

The main fear of some employers during this pandemic?

Decreased productivity.

The prevailing thought was that employees, less supervised than before, would work less given this new organizational freedom.

The endless breaks, the last-minute shopping, the Netflix binging...

We're not going to lie, the majority of teleworkers have taken advantage of this to better combine professional and personal needs.

There have been many productivity studies, too many to mention here.

In the end, productivity dropped slightly on average, but this varied enormously depending on the functions and responsibilities.

Profiles whose tasks were recurrent completed their work more quickly and, not needing to do more, to take advantage of the time available to go about their personal business.

Others worked even harder, especially early in the morning, late at night, or on weekends.

Where some managers suffered from a lack of supervision (monitoring?) of their teams; Some employees did not take well to the distance, the lack of clarity on the establishment of rules... All of them missed interpersonal relationships and this may have impacted the corporate culture and sense of well-being.

In conclusion, there is neither one statistic valid for everyone nor a representative feeling of all employers and employees. However, there is no doubt that the world of work has changed and the effects continue today.

 

Exactly. And today?

Companies are adapting to the demands of employees, especially young people entering the workforce.

They demand flexibility, adapted schedules and, yes, telecommuting.

In Switzerland, the job market is in favour of job applicants. Companies must therefore remain attractive and take these demands into account.

Companies are implementing hybrid work modes that allow the employee more time to work from home but require them to be present for a certain number of days in the office. Again, there is no single rule.

Some organizations simply refuse the principle of remote work.

Others impose a fixed day of attendance.

Some leave the choice to their teams.

One thing is for sure, remote work is here to stay, in one form or another.

More than controlling productivity, more than managing teams and workloads, the real challenge is to keep the links between employees, to ensure proximity between managers and their teams.

Finding a balance between the attractiveness of the employer brand, individual well-being and the needs of the company; This is where the effort must be directed for the future.

 

At work and at home, Milenia is always available

Accessing credit through our financing platform has never been easier.

Everything is within your reach, with customization according to your projects, we accompany you from start to finish so that your projects can see the light of day.

For your personal loan, we offer the best market conditions with 0 application fees. Everything is designed to make your life easier.

Your loan application can be done entirely remotely, with support from your personal advisor or both at the same time.

The flexibility, adaptability, personalization of your offer... All of this is embedded in our approach and services.

As the leading credit player in Switzerland, place your trust in us so that your personal dreams and projects come true.

 

 

 

 

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Loan illustration: loan of CHF 10'000. Effective annual interests rates between 4.9% and 11.95% over a 12 month period lead to total interests of between CHF 261.80 and CHF 624.80. Duration: 6-120 months; Maximum annual interest rate (including all loan handling costs) 11.95%. Loans approval are prohibited if they lead to excess debt for the consumer. (Art. 3 LCD)

 

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