Axel Lehmann, chairman of Credit Suisse Group AG, Colm Kelleher, chairman of UBS Group AG, Karin Keller-Sutter, Switzerland’s finance minister, Alain Berset, Switzerland’s president, Thomas Jordan, president of the Swiss National Bank (SNB), Marlene Amstad, chairperson of the Swiss Financial Market Supervisory Authority (FINMA), left to proper, throughout a information convention in Bern, Switzerland, on Sunday, March 19, 2023.
Pascal Mora | Bloomberg | Getty Images
Switzerland’s monetary regulator on Tuesday referred to as for larger authorized powers and vowed to adapts its strategy within the wake of the Credit Suisse collapse.
The 167-year-old bank was rescued by home rival UBS in March in a deal brokered by Swiss authorities, after a string of risk management failures and scandals triggered a shopper and investor exodus that pressured it to the brink of insolvency.
The Swiss Financial Market Supervisory Authority (FINMA) mentioned in a Tuesday report that, alongside the federal government and the Swiss National Bank, it had achieved the purpose of safeguarding Credit Suisse’s solvency and guaranteeing monetary stability.
It additionally drew consideration to the “far-reaching and invasive measures” taken over the previous years to oversee the financial institution and to “rectify the deficiencies, significantly within the financial institution’s company governance and in its threat administration and threat tradition.”
From summer time 2022 onwards, FINMA additionally instructed the financial institution to take “numerous measures to organize for an emergency” — a warning it suggests went unheeded.
“FINMA attracts quite a few classes in its report. On the one hand, it calls for a stronger authorized foundation, particularly devices such because the Senior Managers Regime, the ability to impose fines, and more stringent guidelines concerning company governance,” the regulator mentioned.
“On the opposite hand, FINMA can even adapt its supervisory strategy in sure areas, and can step up its evaluate of whether or not stabilisation measures are able to implement.”
FINMA mentioned that strategic modifications introduced to de-risk Credit Suisse, equivalent to downsizing its funding financial institution, specializing in its asset administration enterprise and decreasing its earnings volatility, have been “not applied persistently,” whereas “recurrent scandals undermined the financial institution’s status.”
It additionally famous that, even in years when the financial institution posted heavy monetary losses, the variable remuneration remained excessive, with shareholders making little use of alternatives to affect pay packets.
Between 2012 and the financial institution’s emergency rescue, the regulator says it carried out 43 preliminary investigations of Credit Suisse for potential enforcement proceedings. Nine reprimands have been issued, 16 prison fees filed, and 11 enforcement proceedings have been taken towards the financial institution and three towards people.
FINMA mentioned it repeatedly knowledgeable Credit Suisse of dangers, beneficial enhancements and imposed “far reaching measures.” These included “intensive capital and liquidity measures, interventions within the financial institution’s governance and remuneration, and restrictions on enterprise actions.”
“In the interval from 2018 to 2022 it additionally carried out 108 on-site supervisory evaluations at Credit Suisse and recorded 382 factors requiring motion,” FINMA mentioned.
“In 113 of those factors the danger was classed as excessive or essential. These figures and measures illustrate that FINMA exhausted its choices and authorized powers.”
At the time of its collapse, Credit Suisse bosses attributed the lack of confidence to the market panic triggered by the collapse of Silicon Valley Bank within the U.S.
Credit Suisse was requested over the summer time to place in place disaster preparation measures, equivalent to partial enterprise gross sales and the potential sale of your complete financial institution in an existential emergency.
The regulator due to this fact referred to as for “prolonged choices that might allow it to have more affect on the governance of supervised establishments.”
These embody the implementation of a Senior Managers Regime, powers to impose fines and choice of recurrently publishing enforcement proceedings.
“To allow FINMA to successfully intervene in remuneration programs, a more strong authorized mandate is required,” it concluded.