Switzerland's response to the shocking UBS acquisition of Credit Suisse was a black day.

 Switzerland was in disbelief after its largest bank agreed, under pressure from Swiss authorities, to acquire the second-largest bank for €3.25 billion. The government said this was essential to stop the country's and the world's economies from spiraling out of control.

The media and politicians in Switzerland expressed their fury over the collapse of one of the nation's oldest and most recognizable financial organizations, arguing that it could have been preserved despite numerous crises and scandals.

Credit Suisse, regarded as the weakest link in European banking after several years of constant scandals and crises, had its share price plummet last week amid market instability over the failure of two American banks. Swiss authorities came under fire for their perceived tardy response time.

It took the central bank and regulators a whole day to declare a $54 billion lifeline for the bank on the worst trading day of the year, Wednesday, and the government until Sunday evening to make a public statement about the failure.

History-based scandal

The deal was called "shameful for Switzerland" by Thierry Burkhart, leader of Switzerland's right-wing Liberal party, who called Sunday "a bad day for the Swiss banking sector and Switzerland as a whole."

The deal was denounced as "a historic scandal" by the Tages-Anzeiger daily and by the Tribune de Geneve as "a waste, socially (for employment), economically (for the country's reputation), and politically (for the officials who were too lethargic to act)."

Nonetheless, most people concurred that, in the end, there wasn't much of choice. According to the government, the only alternative to the UBS agreement was fully nationalizing Credit Suisse. The arrangement was the "perfect method for restoring the confidence that has been absent in the financial markets recently," Swiss President Alain Berset told journalists Sunday.

He claimed that the country and the global financial system's stability would have suffered "incalculable consequences" if Credit Suisse had gone into freefall. On the other hand, UBS enters this forced union in good shape, earning a $7 billion net profit in 2022.

"Important risk"

The mega-merger, however, carries some danger for the institution. Andrew Kenningham, a Capital Economics analyst, issued a note in which he noted that although "the transaction could draw a permanent line under the troubles facing the Swiss banking system," "the track record of shotgun weddings in the banking sector is mixed."

"Additional significant losses in the heritage bank cannot be ruled out, which may weaken confidence in the expanded UBS and lead to requests for additional state support." Andreas Venditti, a Vontobel expert, agreed. He cautioned that "the UBS investment case changes considerably" and that "there are many uncertainties and severe dangers."

"The problems affecting the global financial sector now are not over." UBS was already the leader in wealth management, but the merger will produce a monster overseeing almost $3.4 trillion.

Because UBS and Credit Suisse's businesses significantly overlap and each has branch offices in every Swiss town and village, the merger could have disastrous effects on employment in Switzerland.

The regulators were allowing UBS, already a giant on the global stage, to become even larger, making it "far more too big to fail," according to an editorial in the Neue Zurcher Zeitung.

"A zombie is going extinct, but a monster is about to be born."