Bern and Zurich, Switzerland (GenevaLunch) - Two days after the Swiss federal government announced a plan to help the Swiss banking system, and in particular UBS, it’s becoming clearer that this was not just a precautionary action, but that the bank needed help.

UBS chairman Peter Kurer, in an interview with NZZ, Zurich’s leading newspaper, said that the bank had considered three options: to do nothing, to ask for state aid, to merge. The first was not really an option that would be acceptable to the bank’s clients, he said, and the third was one it did not want.

The president of Switzerland, Pascal Couchepin, told World Radio Switzerland that intervention “was necessary because of the lack of confidence among the banks and the difficulty of the banks to find liquidity.” He noted that UBS’s capital is good, but liquidity was becoming an increasing problem.

Related story, Financial Times, 17 October 2008

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