FINMA also expects more clearly defined responsibilities at the management levels of the banks. She wants to be able to assign responsibilities within a bank to the various decision-makers from the outset, said the president of the board of directors of the policeman of the fiannce, Marlene Amstad, Wednesday in front of the media in Bern.
Such a “senior manager” system makes it possible to overcome the major obstacle represented by the process of establishing responsibilities in decision-making. The aspects of trust, and therefore of the responsibility of managers, must be better integrated into future “too big to fail” regulations. The supervisory authority can do nothing in the face of strategic errors and the failure of management and the board of directors.
And above all, the one we call the policeman of finance must have the means of sanctions. That FINMA cannot impose fines is an exception among financial centres, underlined Marlene Amstad.
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FINMA, a banking supervisor with limited powers
As a supervisory authority, Finma has been dealing with Credit Suisse for some time now, added Marlene Amstad. The supervisory authority has issued six enforcement proceedings once morest the bank, which in itself is already exceptional.
On average each year, FINMA conducts around 40 enforcement procedures and 600 preliminary investigations per year. These therefore have an effect in 90% of cases.
No other solution than fusion
In the fourth quarter of 2022, the scandal-ridden situation of Credit Suisse worsened with an outflow of funds of 138 billion francs. The collapse of two US regional banks escalated the situation in March.
Crisis mechanisms were ready all this time, said Marlene Amstad. On March 19, there was nothing left to consider but the merger. It was the best option to ensure a certain continuity and the stability of the Swiss financial centre.
The option of bankruptcy was also considered, but, given its consequences, it was quickly “deprioritized”, said FINMA director Urban Angehrn. In a fragile environment, it was necessary to avoid the domino effect of a financial crisis on the economy in general, specified Marlene Amstad.
The systemically important Swiss part of CS would certainly have been saved, but due to the delicate situation in the financial market, the bankruptcy of CS’s international activities would have threatened to cause a general fire and a global financial crisis, a- she added.
Two other options were abandoned on March 19: provisional nationalization, which the Federal Council renounced for political and legal reasons in particular, and consolidation by FINMA according to the “too big to fail” rules, which would have represented a titanic work, with too many losers.
Supervision of the giant UBS in “top priority”
The supervision of the new banking giant UBS will of course be Finma’s “top priority for the coming years”, indicated Marlene Amstad. First, the supervisory authority must rule on the delicate aspects submitted to it by the Competition Commission (Comco).
The regulation of the financial markets indeed confers on the regulator the right to override the competitive aspects. It is a power that Finma can assume if the protection of creditors and financial stability are at stake.
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“I have every confidence that the project will be finalized”, explained the director of FINMA Urban Angehrn during a press conference, explaining however that there was “still a lot of work”.
Before becoming a megabank, UBS and Credit Suisse still need the approval of the US and UK authorities. Here too Urban Angehrn estimated that the two establishments will get the green light for their merger.
But following the finalization comes the integration of the two banks. “It’s a Herculean task that will take several years”, explained the manager, underlining the difficulty “to bring two banks together, the systems, the accounting, the employees but also in the medium term to transform two very different corporate cultures. in one”. Especially since a toxic culture of risk and a lack of control is often put forward as an explanation for the fall of Credit Suisse, undermined by repeated scandals.
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