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Created on 05.04.2023

Hansruedi Köng: “The sector was panic-stricken in 2008, whereas today it’s uneasy at worst”

During the 2008 financial crisis, Hansruedi Köng lost quite a bit of weight due to stress. Right now, the PostFinance CEO is calmer, even though the banking world is going through tough times.

Hansruedi Köng, we’re going through turbulent times in the world of finance at present. The Silicon Valley Bank has collapsed, and Credit Suisse is being taken over by UBS. Is your pulse beating a bit faster right now?

My pulse is up a bit, but it’s not exactly racing.

Hansruedi Köng has been with PostFinance since 2003, and CEO of the company since 2012.

You seem relaxed. Why is that?

The collapse of the Silicon Valley Bank is due to company-specific miscalculations. It’s clear that the risks the bank took managing its balance sheet were too great, and that it was dependent on start-up companies and large-scale investors. When customers withdrew their deposits, the Silicon Valley Bank came under pressure. The situation at PostFinance, by contrast, is very calm. We manage our risk profile in a completely different way, and our customer deposits are broadly diversified.

The Swiss financial center is also being hit by these turbulent conditions. A company with a proud history is going under in the form of Credit Suisse.

The events in the USA have led to uncertainty on the markets. This atmosphere had an impact on an ailing Credit Suisse, which has posted losses in recent times, as well as shortcomings in terms of transparency and asset quality. When large-scale investors lost confidence, that was the final straw.

As CEO of PostFinance, you manage a systemically important bank. How is your day-to-day working life affected by the current turbulence?

The situation is taking up a lot of time. I have to free up my schedule because I keep having to deal with unforeseen circumstances. Politicians, the press, employees, the Board of Directors and other stakeholders need a lot of information, and ask lots of questions. I speak to my staff and our major customers, I listen, and I gather information.

How do you keep track?

I keep my ears open and I carefully read through reports in the morning and the evening, but I don’t keep glancing at news updates on my mobile phone. If something major does happen, I get informed right away.

You’ve been with PostFinance for 21 years, twelve of those as CEO. At the time of the 2008 financial crisis, you were the Head of Finance at PostFinance.

The financial work was at risk of collapsing at the time, and to some extent it did. I remember how we were all gathered in the trade area, our eyes on the screens. CNN and Bloomberg were pretty much reporting every fifteen minutes on major financial institutions being bailed out, or just going under. As head of finance, I bore responsibility for the financial assets of PostFinance. We constantly monitored our positions, and checked what securities we had with at-risk issuers. My pulse was racing. Indeed, during that time, I even lost some weight. The current situation, by contrast, is not having the same slimming effect on me.

Why do you think you haven’t you lost your appetite for the job? What’s different today from 2008?

When it comes to financial management, we think in terms of scenarios. We simulate risks and carry out stress tests. We have a better understanding of the factors that might lead to instability, and the banking world is better prepared.

And yet, in the case of Credit Suisse, the Federal Council intervened with emergency powers, and threw at least some of the “too big to fall” rulebook out the window over the course of a weekend.

This certainly came as a big surprise to us all, but I know this wasn’t a decision the people involved took lightly.

The Swiss financial center spent 15 years developing and implementing emergency scenarios. Was the work ultimately futile?

Far from it. The Federal Council and the relevant authorities had to weigh up the pros and cons, and decided against implementing the emergency scenarios on a consistent basis. It’s hard to tell what triggered implementation of the emergency plan, but the work done certainly achieved something.

What exactly?

Even if a liquidity crisis brought Credit Suisse to its knees, it’s worth pointing out the bank is not heavily in debt. 15 years ago, the state would have needed to intervene with capital, and taxpayers would no doubt have had to foot the bill. In the current situation, this is unlikely to happen, but there is never a guarantee a bank won’t go under. This is simply the nature of banking. If a bank were to opt for a zero-risk strategy, it would not longer be able to fulfil its function.

What does this turbulence mean for PostFinance?

More opportunities than risks. The customers of UBS and Credit Suisse will be keen to diversify their investments. In this regard, PostFinance is a good option.

PostFinance grew substantially over the course of the 2008 financial crisis. Do you expect a similar development now?

No, we are already able to predict that the impact will not be as great. The sector was panic-stricken in 2008, whereas today it’s uneasy at worst. But we are seeing an inflow of customers. Even though our balance sheet isn’t growing, this does mean we’re gaining market share in the face of tightened monetary policy.

Why is PostFinance attractive to customers looking for a safe haven?

We have a high profile and enjoy trust. History, too, plays a role. We’ve always operated responsibly, and have never embarked on high-risk experiments. But security alone is not enough. We’re committed to providing a high quality of service. We invest a lot of money in developing our systems, processes and products, and we want our customers to be happy to do business with PostFinance.

What risks does the current situation pose for the Swiss financial center?

We don’t know what direction regulations are heading in. The knowledge that a bank could go under even in the current climate may result in a further tightening of the regulations on banks.

Parliament is convening after Easter for a special session, and will be looking at the events surrounding Credit Suisse.

It’s a challenge to get regulations just right. I’m personally in favour of effective, robust regulations and supervision. A concept that’s well suited to a major international bank can’t be applied to domestic banks.

Various politicians and parts of the media are calling for a counterbalance to UBS now, and giving PostFinance the opportunity to issue its own loans. Is this an opportunity for PostFinance?

You won’t hear any calls for political measures from me. The Federal Council initiated the lifting of the lending prohibition, and the Parliament’s verdict last year was loud and clear: “No”. And if, in view of the situation with UBS and Credit Suisse, the government were to conclude that PostFinance should indeed lend, the impetus would need to come from the government. Our position is well known. The lending prohibition is a significant competitive disadvantage.

You announced you’ll be stepping down as CEO of PostFinance in late February 2024. Will you miss leading PostFinance during such turbulent times?

Yes, it’s something I’ll miss. True, I don’t want any turbulence or crises, but these are precisely the times when a job like mine is at its most exciting.

Sergio Ermotti is returning to the world of banking and is leading UBS once again. Would you consider postponing your retirement given current turbulence on the market?

I don’t see any need for this at PostFinance. I’m not retiring actually, and want to continue working in a corporate role, just not in the same position anymore. When I step down, I’ll have spent twelve years as CEO, and I’ll look back on a fantastic time with PostFinance.

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