'A financial banana republic': UBS-Credit Suisse deal puts Switzerland's reputation on the line - CNBC

The rescue deal means Switzerland, a country heavily dependent on finance for its economy, is on track to see its two biggest and best-known banks merge into just one financial giant.

A country-wide reputation with prudent financial management, sound regulatory oversight, and, frankly, for being somewhat dour and boring regarding investments, has been wiped away," Marenzi said.

Under the terms of the emergency takeover, investors in Credit Suisse's additional tier-one bonds — widely regarded as a relatively risky investment — will see the value of their holdings slashed to zero.

"The extraordinary government support will trigger a complete write-down of the nominal value of all AT1 debt of Credit Suisse in the amount of around CHF 16 billion, and thus an increase in core capital," FINMA said Sunday.

Vítor Constâncio, who served as the vice president of the European Central Bank from 2010 to 2018, said via Twitter that FINMA's announcement was a "mistake with consequences and potentially a host of court cases."

"This approach has been consistently applied in past cases and will continue to guide the actions of the SRB and ECB banking supervision in crisis interventions," they said.