UBS Saved Credit Suisse. Now for the Bad News

Swiss authorities may have averted disaster by forcing a merger of the country’s two largest banks, the distressed Credit Suisse Group AG and the stronger UBS Group AG. But their actions also send a troubling message: A decade and a half after the last global financial crisis, regulators still aren’t confident that they can safely manage the demise of a systemically important bank, even a relatively small one.

Under the circumstances, the acquisition by UBS was probably the best that could’ve been hoped for. Given how quickly Credit Suisse’s depositors and counterparties were fleeing, and how urgently regulators sought a deal over the weekend, any other outcome would have wrought even greater havoc. The combined entity should be able to meet necessary obligations and maintain critical functions.