CS-PUK blames Finma and Federal Council – News

The Parliamentary Commission of Inquiry primarily criticizes the supervisory authority Finma and the Federal Council. The overview.

Credit Suisse itself to blame:
The PUK emphasizes that the CS itself is responsible for its collapse. The CS therefore took excessive risks and produced too many scandals and affairs. She also opposed corrective measures by the financial market regulator Finma. Also included in the picture are the excessive bonuses given to top CS people – measured against the poor results. Here are two figures: The so-called “performance bonuses” to CS management totaled 39.8 billion francs from 2010 to 2022. At the same time, the bank wrote a total loss of 33.7 billion francs.

Finma too lax:
The PUK does not skimp on criticism of the financial market regulator Finma. The supervisory authority has repeatedly tried to bring the CS leadership to reason as part of its monitoring mandate. But in the years before the crisis it had not asserted itself enough. The PUK is particularly critical of the relief that the CS supervisory authority granted with regard to equity requirements. To put it simply, thanks to these simplifications, the CS appeared to be more stable to the outside world than it actually was. In the crisis from autumn 2022, it was too late to turn things around in time.

Legislation with gaps:
The legal framework in which CS operates as a large, international bank is of great importance. Like UBS, CS has been one of the globally systemically important banks since the great financial crisis of 2008. In other words: the CS was “too big to fail” (TBTF) to be abandoned by the state in a crisis. In order to defuse this problem, the idea was that additional capital buffers should have ensured increased security. It’s just that there were gaps in the relevant TBTF capital requirements. The PUK report shows that the CS exploited these loopholes to whitewash its situation.

Federal Council partly too close to banks:
The PUK says that parliament, as a legislator, also shares responsibility for gaps in regulation. But above all the government, namely Federal Councilor Ueli Maurer (head of the finance department from the beginning of 2016 to the end of 2022), sometimes showed great consideration for banks like CS. As a result, the banks got through with their concerns. For example, they spoke out against even stricter capital requirements and got their way.

Crisis management with deficiencies:
The PUK comes to the conclusion that the Federal Council, the Financial Market Authority and the National Bank successfully prevented an international financial crisis in the spring of 2023. The merger with UBS using emergency law prevented something worse from happening. But the CS crisis also highlighted weaknesses in the cooperation between the most important players – the federal government, the National Bank, Finma. The PUK makes a number of recommendations to improve crisis prevention and management. For example, the Federal Council should ensure that Finma can assert itself better among banks in the future.