Swiss Authorities’ Handling of Credit Suisse Crisis to Influence UBS Regulation

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A long-awaited report on how Swiss authorities managed the collapse of Credit Suisse is set to be released soon, possibly leading to stricter oversight of its new owner, UBS.

Once a prominent figure in the global financial sector, Credit Suisse faced a series of scandals that led to its state-backed rescue by UBS in March 2023. In June 2023, the Swiss parliament formed a committee to investigate the government’s response to the 167-year-old bank’s downfall.

The government aims for the report's findings to inform new regulations to prevent a similar crisis in the future, with officials placing blame on Credit Suisse’s management. A key proposal set out in April suggests that UBS and other systemically important banks should hold more capital, a move UBS has warned against amid ongoing uncertainty that affects its outlook.

Swiss newspaper SonntagsBlick reported that the parliamentary committee is unlikely to make recommendations on bank capital. While the report may not have a direct impact on UBS, Bank Vontobel analyst Andreas Venditti notes that its conclusions could influence public and political opinion in Switzerland.

The committee, known as PUK, has kept its work secret, with some leaks indicating that authorities, particularly market regulator FINMA, could face criticism. Some reports suggest that FINMA could have taken stronger action to curb Credit Suisse's management as its troubles grew. FINMA has said it requires greater powers and the government is advocating for its strengthening.

The PUK, which promised to release the report by the end of 2024, has yet to announce an exact date but confirmed it should be available this year.

Additionally, the Swiss National Bank (SNB) and its former chairman, Thomas Jordan, are expected to face criticism for insufficient action. Reports indicate that Jordan had initially supported the idea of nationalizing Credit Suisse before abandoning the plan due to opposition from FINMA and Credit Suisse. Critics argue that Jordan could have done more to publicly commit to saving the bank.

The finance ministry and SNB have declined to comment, while FINMA stated that it had used all available tools to address issues with Credit Suisse but was less equipped compared to international regulators. It also called for more effective supervision and earlier intervention powers for Switzerland.

 

 

 

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.