In
a report released today (Tuesday), the Swiss Financial Market Supervisory
Authority (FINMA) has disclosed critical oversights in the supervision of Credit
Suisse, citing failures in risk management, corporate governance, and risk
culture. The report underscores the regulator’s efforts to safeguard the bank’s
solvency, alongside the government and the Swiss National Bank, while drawing
attention to the inadequacy of implemented measures.
The
report revealed that despite imposing “far-reaching and invasive
measures” over the years, the regulator’s warnings, particularly those
issued from summer 2022 onward, went unheeded. FINMA stressed the need for a
stronger legal basis, advocating for instruments like the Senior Managers
Regime, the power to impose fines, and stricter rules on corporate governance.
Strategic
changes announced by Credit Suisse to de-risk, including downsizing its
investment bank and focusing on asset management, were criticized for
inconsistent implementation. The report noted that recurrent scandals
undermined the bank’s reputation, and even during periods of financial losses,
variable remuneration remained high.
FINMA
conducted 43 preliminary investigations, issued nine reprimands, filed 16
criminal charges, and initiated 11 enforcement proceedings against the bank and
three individuals. The regulator repeatedly informed Credit Suisse of risks,
recommended improvements, and imposed extensive measures, including capital and
liquidity measures and interventions in governance and remuneration.
Despite
conducting 108 on-site supervisory reviews and recording 382 points requiring
action between 2018 and 2022, the report revealed that FINMA’s options and
legal powers were exhausted. Credit Suisse attributed its loss of confidence to
market panic triggered by the collapse of Silicon Valley Bank in the U.S.
In
response to the findings, FINMA called for extended regulatory options,
including the implementation of a Senior Managers Regime, powers to impose
fines, and the regular publication of enforcement proceedings. The report
concluded that a more robust legal mandate is necessary for effective
intervention in remuneration systems.
The
167-year-old Credit
Suisse, facing a series of risk management failures and scandals, was
rescued by domestic rival UBS in March under a deal brokered by Swiss
authorities. The report sheds light on the gravity of oversight lapses and
emphasizes the pressing need for regulatory reforms in the Swiss banking
sector.
Parliamentary
Probe: Investigating Credit Suisse’s Collapse
Earlier,
Finance Magnates reported that a
14-member
parliamentary commission launched an investigation into the collapse of
Credit Suisse, occurring three months after Swiss lawmakers rejected a CHF 109
billion government rescue package for UBS to acquire the troubled bank. The
investigation followed discontent among Swiss lawmakers over the emergency
takeover by UBS, which bypassed parliamentary approval.
UBS
recently completed the acquisition, forming a banking giant with a $1.6
trillion balance sheet. The Swiss Parliamentary Commission, headed by Isabelle
Chassot, has scrutinized actions by public authorities, including the Swiss
National Bank and FINMA, before and during the emergency acquisition. Key
elements include SNB’s CHF 50 billion credit facility to support Credit
Suisse’s liquidity and FINMA’s $17 billion write-off in AT1 bonds. The
commission has an 18-month timeframe to report findings and recommendations to
the Swiss government and parliament.
In
a report released today (Tuesday), the Swiss Financial Market Supervisory
Authority (FINMA) has disclosed critical oversights in the supervision of Credit
Suisse, citing failures in risk management, corporate governance, and risk
culture. The report underscores the regulator’s efforts to safeguard the bank’s
solvency, alongside the government and the Swiss National Bank, while drawing
attention to the inadequacy of implemented measures.
The
report revealed that despite imposing “far-reaching and invasive
measures” over the years, the regulator’s warnings, particularly those
issued from summer 2022 onward, went unheeded. FINMA stressed the need for a
stronger legal basis, advocating for instruments like the Senior Managers
Regime, the power to impose fines, and stricter rules on corporate governance.
Strategic
changes announced by Credit Suisse to de-risk, including downsizing its
investment bank and focusing on asset management, were criticized for
inconsistent implementation. The report noted that recurrent scandals
undermined the bank’s reputation, and even during periods of financial losses,
variable remuneration remained high.
FINMA
conducted 43 preliminary investigations, issued nine reprimands, filed 16
criminal charges, and initiated 11 enforcement proceedings against the bank and
three individuals. The regulator repeatedly informed Credit Suisse of risks,
recommended improvements, and imposed extensive measures, including capital and
liquidity measures and interventions in governance and remuneration.
Despite
conducting 108 on-site supervisory reviews and recording 382 points requiring
action between 2018 and 2022, the report revealed that FINMA’s options and
legal powers were exhausted. Credit Suisse attributed its loss of confidence to
market panic triggered by the collapse of Silicon Valley Bank in the U.S.
In
response to the findings, FINMA called for extended regulatory options,
including the implementation of a Senior Managers Regime, powers to impose
fines, and the regular publication of enforcement proceedings. The report
concluded that a more robust legal mandate is necessary for effective
intervention in remuneration systems.
The
167-year-old Credit
Suisse, facing a series of risk management failures and scandals, was
rescued by domestic rival UBS in March under a deal brokered by Swiss
authorities. The report sheds light on the gravity of oversight lapses and
emphasizes the pressing need for regulatory reforms in the Swiss banking
sector.
Parliamentary
Probe: Investigating Credit Suisse’s Collapse
Earlier,
Finance Magnates reported that a
14-member
parliamentary commission launched an investigation into the collapse of
Credit Suisse, occurring three months after Swiss lawmakers rejected a CHF 109
billion government rescue package for UBS to acquire the troubled bank. The
investigation followed discontent among Swiss lawmakers over the emergency
takeover by UBS, which bypassed parliamentary approval.
UBS
recently completed the acquisition, forming a banking giant with a $1.6
trillion balance sheet. The Swiss Parliamentary Commission, headed by Isabelle
Chassot, has scrutinized actions by public authorities, including the Swiss
National Bank and FINMA, before and during the emergency acquisition. Key
elements include SNB’s CHF 50 billion credit facility to support Credit
Suisse’s liquidity and FINMA’s $17 billion write-off in AT1 bonds. The
commission has an 18-month timeframe to report findings and recommendations to
the Swiss government and parliament.
