The Swiss policeman of the financial markets was unable to prevent the errors of the directors of Credit Suisse, whose fall almost triggered a global financial crisis in 2023, narrowly avoided thanks to the intervention of the Swiss authorities, according to a commission of inquiry Friday.
After almost eighteen months of investigation, this commission published a long-awaited report in which it considers that the board of directors and management of Credit Suisse are “responsible for the loss of confidence in the bank”.
In this text of more than 500 pages, she indicates, however, that she has not identified “no wrongdoing” Swiss authorities, believing that they even allowed “to avoid an international financial crisis”.
This commission, set up less than three months after the rescue of the former second largest bank in Switzerland, however expressed criticism, in particular towards Finma, the banking supervisory authority, of which it deplores “partial inefficiency”including before the panic on the markets in March 2023.
The president and vice-president of the Swiss parliamentary inquiry committee Isabelle Chassot and Franziska Ryser, with other members during a press conference at the Swiss Parliament in Bern, December 20, 2024 / GABRIEL MONNET / AFP
She says in particular that she does not understand why Finma granted in 2017 “vast capital relief”without which the bank would have “already had difficulty meeting regulatory requirements” four years later, in 2021, and “would have been absolutely incapable of doing so from 2022”.
Finma had launched numerous procedures and warnings against Credit Suisse, and made criticisms concerning the remuneration of its senior executives. But she came up against “to the reluctance of the bank, and that’s a polite way of putting it”said MP Roger Nordmann, one of the members of the committee, during a press conference at Parliament in Bern.
Parliamentary commissions of inquiry are extremely rare in Switzerland. This is only the fifth in the history of Parliament.
In March 2023, the Ministry of Finance, the central bank and Finma met to quickly find a solution after panic in the wake of the bankruptcy of three American banks. The Swiss authorities had opted for a takeover by its competitor UBS.
“Learn lessons”
This commission, which interviewed 79 people and analyzed more than 30,000 pages of documents, also criticized the rules applicable to banks considered too big to fail, considering that the government and Parliament had granted a “too much importance” at the demands of the big banks.
She criticizes an implementation “hesitant” rules for these so-called systemically important establishments, which must comply with stricter requirements given their weight in the economy.
According to this commission, which made 20 recommendations, it is necessary “must learn lessons” of this crisis, especially since the State had already had to intervene in 2008 to come to the aid of UBS and Switzerland “now has only one globally systemically important bank”.
The merger of two of the country’s largest banks has created a colossus that is causing significant concern in the Alpine country, where many are wondering about future options in the event of a crisis.
The merger of Credit Suisse and UBS, the two largest Swiss banks, has created a colossus which raises significant concerns about the future in the event of a crisis / Fabrice COFFRINI / AFP/Archives
“This report confirms that the collapse of Credit Suisse was driven by years of strategic errors”reacted UBS in a press release.
But if the bank reaffirms its support “most recommendations” already made by the government, she still maintains that the rules must be adjusted so “targeted” to guarantee the competitiveness of the Swiss financial center.
The Swiss Association of Bank Employees, on the other hand, called for more resources to regulate the sector, affirming in a press release that the collapse of Credit Suisse was due to “some unscrupulous senior managers”with “one more time” the staff “who pays the bill”.