The Swiss government's proposal of a veteran left-wing politician to lead its postal services is raising eyebrows. Will the former union boss halt the planned privatization of Postfinance?

Bern-based Postfinance is in sickly health, and the Swiss government plans to give up majority control in a bid to improve its fortunes. The government is drafting law to allow Postfinance, which will be carved out of the postal service, to write loans and mortgages.

So far so good – at least until the government proposed Christian Levrat, who led Switzerland's left-wing Social Democrat party (SP) until last year, to preside the wider postal group.  Levrat's roots in Switzerland's unions are at odds with the planned privatization of the finance unit, which his party colleagues have already deemed «out of bounds».

Privatization Out Of Question?

The government's choice of Levrat, who in parliament frequently took a tough stance on finance, would seem to undermine the full liberalization of the lending arm. That is «definitely not» the case, lower-chamber lawmaker Edith Graf-Litscher told finews.com.

«Even if the SP will mobilize to keep Postfinance as a full subsidiary of the postal services,» she said. Levrat's election as chairman, slated for Tuesday, shouldn't be overstated, she noted, and the question of whether Postfinance will be fully privatized or not isn't up to him alone.

Intersection Bern and Business

Her comments illustrate how Postfinance is at the intersection of business and politics – and frequently at the mercy of both. It is criticized by rivals including Credit Suisse boss Thomas Gottstein for enjoying government backing.

Postfinance is an unusual hybrid: it has held a banking license since 2013, but it isn’t allowed to write loans on its books, thanks to vociferous opposition from its domestic banking rivals. The government said it aims for Postfinance draft law to respond to concerns over competitiveness, federalism, and financial market stability.

Master Of Middle Ground

Another SP lawmaker, Matthias Aebischer, said Levrat's ability to seek a compromise would come in handy in uniting the disparate interests. «He knows the political process, has for more than 20 years sought and found compromises, and is accustomed to negotiating at the highest levels, Aebischer told finews.com.

He also rejected criticism of Levrat for lacking finance or even private sector experience. «Unlike other decision-makers, like at Credit Suisse right now, Levrat has never failed big and sunk billions,» Aebischer said.

Peers Fear Lending Rival

Nevertheless, Levrat, a 51-year-old native of Switzerland's Gruyère region, is unlikely to force through the liberalization of Postfinance, one of five systemically-relevant Swiss lenders. A partial privatization would mean a new entrant into the hotly-contested market for credit in Switzerland.

A clutch of domestic banks – Migros, Raiffeisen, a cantonal banking and a regional bank group – had last autumn slammed the lifting of Postfinance's lending ban as «illegitimate sham solution» which would spark new problems and an unfavorable dynamic. The Swiss Bankers association – minus Postfinance itself, which is also a member despite its non-bank status – had also rejected the move (in German).