Switzerland’s financial regulator, FINMA, is seeking greater legal powers and has announced plans to adapt its approach in the wake of the collapse of Credit Suisse. The bank was rescued by UBS in March after experiencing risk management failures and scandals that led to the withdrawal of clients and investors.
Working alongside the Swiss government and the Swiss National Bank, FINMA successfully ensured Credit Suisse’s solvency and financial stability. The regulator has emphasized the extensive measures it took to supervise the bank, particularly in areas such as corporate governance and risk management.
However, FINMA had previously warned Credit Suisse to take steps to prepare for an emergency, but it believes that these warnings were ignored. As a result, key lessons learned from the collapse include the need for a stronger legal framework, the ability to impose fines, and stricter rules on corporate governance.
To address these issues, FINMA intends to adapt its supervisory approach in certain areas and increase its scrutiny of stabilisation measures. It was revealed that strategic changes announced by Credit Suisse to de-risk the bank were not consistently implemented, while recurring scandals further damaged its reputation.
One of the criticisms faced by Credit Suisse is that variable remuneration remained high even during years of heavy financial losses, and shareholders had little influence over executive pay. Between 2012 and the bank’s emergency rescue, FINMA conducted a total of 43 preliminary investigations, issued reprimands, filed criminal charges, and initiated enforcement proceedings.
Throughout this period, FINMA consistently alerted Credit Suisse to potential risks, recommended improvements, and imposed extensive measures, including capital and liquidity restrictions, governance interventions, and business limitations.
These recent developments highlight the need for stronger regulations and oversight in the Swiss financial industry. The collapse of Credit Suisse serves as a reminder of the importance of effective risk management and the potential consequences of failing to heed regulatory warnings.
With FINMA’s call for greater legal powers and plans to adapt its approach, it is evident that efforts are being made to prevent similar crises in the future. It remains to be seen how these changes will be implemented and what impact they will have on the Swiss banking sector as a whole.
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