Swiss National Bank's Martin: Credit Demand Shifts to Inland-Focused Banks

The SNB Vice President, Antoine Martin, has stated that the takeover of Credit Suisse by UBS has led to a shift in credit demand towards Swiss-focused banks. The trend is moving away from large institutions like UBS, with the market being able to meet the demand. The Swiss banking sector is overall in good shape, with the SNB adapting well to the massive shock to the system. Martin is discussing reforms to prevent a crisis like Credit Suisse, as the country debates comprehensive reforms. The SNB has lowered the interest rate to zero, with banks warning that this could impact their profitability.

The takeover of Credit Suisse by UBS Group AG has sparked a significant shift in the Swiss credit market, with demand now predominantly favoring domestically oriented banks. This trend has been highlighted by Swiss National Bank (SNB) Vice President Antoine Martin, who noted that the market has been able to meet the increased demand effectively [2].

Following the demise of Credit Suisse, clients have been redirecting their loans away from large, globally active banks like UBS. Despite this shift, the Swiss banking sector has shown remarkable resilience, adapting well to the substantial shock to the system. Martin, who heads the SNB’s department for financial stability, expressed that the overall health of Swiss banking is strong [2].

The SNB has been proactive in implementing measures to prevent another crisis similar to Credit Suisse. This includes lowering the interest rate to zero, a move that has been met with warnings from financial institutions about potential impacts on profitability. The central bank's decision to cut its benchmark rate is part of a broader strategy to deter investors from pushing money into the Swiss franc, which has surged due to geopolitical factors and tariffs introduced by the U.S. president [2].

The Swiss banking sector's resilience is also reflected in the ongoing debate over large-scale reforms. The SNB is considering measures to prevent future crises, with a focus on maintaining the stability of the financial system. The current interest rate environment has led to concerns about negative interest rates, which could further impact bank profitability [2].

In parallel, Swiss lawmakers have been discussing proposals to cap executive compensation at the country’s biggest banks. Initially, a bill was proposed to cap salaries at between 3 million and 5 million francs per year. However, this bill has been watered down in the lower house, removing a fixed upper limit and focusing instead on ensuring that variable remuneration should not be paid if the business does not perform well [1].

This shift in the Swiss banking sector aligns with broader trends in the region. In 2023, the UK scrapped an EU-era cap on bonuses, a move that was welcomed by Wall Street banks as it helped align the pay structures of top bankers with those in New York [1].

Overall, the Swiss banking sector is showing signs of recovery and adaptation following the Credit Suisse takeover. The SNB’s proactive measures and the resilience of Swiss-focused banks indicate a sector well-positioned to navigate the challenges ahead.

References:
[1] https://www.livemint.com/companies/news/swiss-banker-bonus-cap-proposal-watered-down-in-parliament-11755769460083.html
[2] https://www.bloomberg.com/news/articles/2025-08-21/snb-s-martin-says-credit-demand-shifting-to-swiss-focused-banks