The Savings & Loan bank Thun (SLT) was declared insolvent in October 1991, the first year of the regional bank crisis in Switzerland. Pictures of the bank run went around the world and scratched on the extraordinary reputation of Swiss banks. In contrast to other banks who were bailed out by cantons or acquired by bigger banks, the SLT got liquidated in an expensive process that came to an end after 14 years in 2005. The liquidation capital finally amounted only to roughly 60% of the liabilities and that is why the event remains as a trauma in the minds of the region's people.
The collapse of the SLT was the motivation to revise the Swiss banking legislation dating back to the 1930s. It constituted the other comprehensive revision of banking legislation in the last 90 years in Switzerland next to the revision of the too big to fail legislation in the aftermath of the subprime crises and the related UBS bail-out in 2008.
Though data for a detailed comparison is not available, this paper will show that real estate prices on a national level faced heavy declines only after 1991. Hence, either the region of Thun experienced higher price declines already in 1991, which cannot be tested, since regional data is not available, or what will be argued, the SLT was mismanaged and thus more vulnerable to the massive interest rate hike by the SNB in 1989 than other (regional) banks.
Inhaltsverzeichnis (Table of Contents)
- The regional bank crisis
- Characteristics of the Swiss banking sector in 1991
- Structural changes in the banking sector
- Macroeconomic developments
- Comparison to other crises
- Savings & Loan bank Thun (SLT) in the narrative of the regional bank crisis
- The case of the Savings & Loan bank Thun (SLT)
- Chronology of the Savings & Loan bank Thun's anniversary year 1991
- Savings & Loan bank Thun's credit activity
- Supervision problems/ auditors' failures
- Why was the Savings & Loan bank Thun (SLT) not bailed out?
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper aims to analyze the collapse of the Savings & Loan bank Thun (SLT) in 1991, the first year of the regional bank crisis in Switzerland. The paper investigates the circumstances leading to the bank's failure, including its credit activity, supervision problems, and the macroeconomic environment. It also explores why the SLT was not bailed out, contrasting its fate with other banks during the crisis.- The regional bank crisis in Switzerland and its impact on the Swiss banking sector
- The specific case of the Savings & Loan bank Thun (SLT) and the reasons for its collapse
- The role of macroeconomic factors, particularly interest rate hikes, in exacerbating the crisis
- The differences in treatment between the SLT and other banks during the crisis
- The impact of the SLT's collapse on Swiss banking legislation
Zusammenfassung der Kapitel (Chapter Summaries)
- Chapter 1: The regional bank crisis: This chapter examines the regional bank crisis in Switzerland, providing an overview of the Swiss banking sector in 1991, including its structure, segmentation, and key players. It analyzes the macroeconomic developments that contributed to the crisis and compares it to other banking crises. Additionally, it positions the Savings & Loan bank Thun (SLT) within the narrative of the crisis.
- Chapter 2: The case of the Savings & Loan bank Thun (SLT): This chapter delves into the specific case of the SLT, tracing its chronology during the crisis year 1991. It examines the bank's credit activity, its vulnerability to interest rate hikes, and the potential role of supervision problems and auditors' failures in its downfall.
Schlüsselwörter (Keywords)
This paper focuses on the regional bank crisis in Switzerland, specifically the collapse of the Savings & Loan bank Thun (SLT) in 1991. Key terms include: regional bank crisis, Swiss banking sector, credit activity, interest rate hikes, supervision problems, auditors' failures, bank insolvency, and the impact on banking legislation.- Quote paper
- Jan Gygax (Author), 2021, The Collapse of the Savings & Loan Bank Thun in the Year of its 125th Anniversary (1991), Munich, GRIN Verlag, https://www.grin.com/document/1044762
