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Swiss Parliament Nears Deal on UBS Guarantees as MPs Change Vote
(Bloomberg) -- Swiss parliament is approaching a deal to push through government guarantees for UBS Group AG’s takeover of Credit Suisse Group AG after a upper houses compromise was met with approval in the lower chamber.
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“The majority of our party will vote for this proposal if the government will pursue higher capital ratios and restricted bonuses,” Social Democrat lawmaker Roger Nordmann said in the lower house in Bern on Wednesday. The stricter stance on banks is “a major development,” he said.
The 200-member lower house late on Tuesday voted against the 109 billion francs ($120 billion) in guarantees. While that was a symbolic vote that can’t stop the deal, it clashed with the upper house’s approval earlier in the day.
As a stalemate would force the bill to fail, the upper house earlier today adopted amendments in line with what their lower-house colleagues had demanded. Those provisions seek to adjust the law to limit the risks systemically relevant banks pose to taxpayers.
Comments by Nordmann and other lower-house lawmakers now suggest that a majority will be achieved in both chambers, allowing Switzerland to avoid an embarrassing situation.
Irrespective of the vote, parliament can’t stop the takeover negotiated last month as the government already got approval from a small group of senior lawmakers, which is entitled to act on behalf of parliament in case of urgency.
The key demand the upper house now passed calls on the government to revise banking laws demanding higher capital requirements and restrictions on bonuses. But lawmakers’ agreed wording only stipulates that the executive should “examine” this, not that it is “instructed” to do so.
“We are agreed that after the events of March 19 we cannot just move on,” said Pirmin Bischof, a Center Alliance member in the upper house, referring to the day the deal was agreed. “The too-big-to-fail regulation just simply didn’t have any effect. And so we need to ask the government to come up with a changed law that will solve this problem.”
Symbolic Vote
The lower house’s rejection — just before midnight on Tuesday — highlights the anger among lawmakers on both sides of the political spectrum ahead of national elections later this year. An overall rejection would send a signal of Switzerland’s legislative not backing the deal, which some MPs suggested should be done.
“We should only approve a deal when it’s good enough for the Confederation — right now this deal is only good enough for UBS,” said Thomas Minder, adding that a ‘no’ wouldn’t be the “end of the world.”
Lawmakers also acknowledged their lack of power of actually influencing the deal.
“If we could really turn down the loans here, I believe nobody would hesitate,” said Eva Herzog of the Social Democrats.
The standoff is largely symbolic. The government had said that “if parliament refuses subsequent approval, it will be tantamount to a political reprimand” for the group of senior lawmakers that green-lit it, but would have “no legal effect.”
The Credit Suisse crisis three weeks ago has shaken Switzerland, evoking memories of the Great Financial Crisis. The government argued on Tuesday that the creation of a Swiss banking juggernaut was the best solution among a limited number of options.
In addition to state guarantees, the Swiss National Bank offered liquidity assistance. SNB sight deposit numbers published this week suggest that after accessing such money, Credit Suisse may have returned more than half of the funds.
Switzerland’s executive isn’t made up of a coalition or an outright majority, but of seven ministers from the country’s four largest parties. They usually make decisions by consensus and try to find pragmatic compromises — often outside of party lines.
Ministers don’t publicly oppose government decisions, irrespective of their parties’ stance on a matter or how they personally voted behind closed doors.
This setup means that parliament offers parties the most prominent platform to sway voters, which explains aggressive comments in that forum even if they at times lack bite.
--With assistance from Claudia Maedler.
(Updates with lower house from first paragraph.)
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