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Ex-Credit Suisse CEO Calls Negative Interest Rates ‘Crazy’

Andy Hoffman

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Oswald Gruebel, who led both of Switzerland’s two biggest banks during his career, criticized negative interest rates and argued they’d lead to a further decline of the country’s financial sector.

“Negative interest rates are crazy. That means money is not worth anything anymore,” Gruebel said in an interview with Swiss newspaper NZZ am Sonntag. “As long as we have negative interest rates, the financial industry will continue to shrink.”

Gruebel served as Credit Suisse CEO from 2004 to 2007 and as UBS Group AG’s top executive from 2009 to 2011.

The Swiss National Bank has used negative interest rates since 2015 to rein in an appreciation of the franc, arguing the policy -- together with a pledge to intervene in currency markets -- is crucial to protect the economy.

Yet banks are suffering. Credit Suisse plans to impose charges on more wealthy clients as it prepares to spread the pain of subzero rates, Bloomberg News reported in September.

Policy makers are aware of the burden. At their last meeting in September, they decided to offer banks additional relief by exempting a larger amount of their deposits from the charge. The move was seen as giving the SNB some leeway to cut rates further if needed.

Spying Scandal

In the interview, Gruebel also addressed the spying scandal that has rocked the Swiss financial sector. He previously called for current Credit Suisse CEO Tidjane Thiam to step down over a decision to hire private detectives to trail the former head of wealth management Iqbal Khan as he was about to defect to UBS.

Credit Suisse Chief Operating Officer Pierre-Olivier Bouee resigned and assumed responsibility for ordering the spying, which Credit Suisse said “resulted in severe reputational damage to the bank.” Thiam, who has claimed he wasn’t aware, was cleared of any responsibility in the scandal in a report commissioned by the bank.

Gruebel argued Credit Suisse’s handling of the situation has hurt the standing of Switzerland as a banking hub.

“Foreign media are bursting with glee,” he was quoted as saying. “In a business that above all requires expertise, there’s nothing worse than to look ridiculous.”

Saving Face

Gruebel resigned from his post at UBS in 2011 shortly after it was revealed that a trader had lost $2 billion. He took the decision “to save the bank’s reputation,” he told NZZ.

“The CEO must take responsibility. In such incidents, the boss cannot blame anyone, even if he did not know it.”

In response to a question whether Credit Suisse would be well advised to install a local at the top, Gruebel told NZZ that while it is helpful to have employees with global experience, Swiss banks are “less global” these days and “it would make sense to use a Swiss CEO again.”

To contact the reporter on this story: Andy Hoffman in Geneva at ahoffman31@bloomberg.net

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Jana Randow, Rakteem Katakey

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