CEPR article on Credit Suisse

In an article written together with Anat Admati, Professor of Finance and Economics at the Stanford Graduate School of Business at Stanford University, and Max Planck Institute for Research on Collective Goods director, Martin Hellwig, LBS’s Professor Richard Portes reviews the fate of Credit Suisse. A series of corporate collapses spooked clients who began withdrawing their money, a trend that accelerated when US bank failures sparked fear of a broader banking crisis.

The runs on Silicon Valley Bank (SVB) and Credit Suisse in March 2023 revived attention on banking regulation, resolution, and government intervention. The Vox EU Centre for Economic Policy Research (CEPR) article, Credit Suisse: Too big to manage, too big to resolve, or simply too big? analyses the details of the run on Credit Suisse and its eventual takeover by UBS.

It highlights multiple discrepancies between official statements and implemented measures, both by Credit Suisse and Swiss authorities. Furthermore, it argues that the reforms adopted after the 2007-2009 crisis are still insufficient for resolving systemic institutions. Going forward, authorities must be able to act promptly and implement correction actions before risks of failure become too severe.