2023-06-22 13:02:16
The Swiss National Bank intends to learn the lessons of the crisis that shook Credit Suisse and take appropriate measures to strengthen the resilience of banks, it said Thursday in its annual report on financial stability.
In March, the Swiss National Bank (SNB) had to come to the rescue of the number two in the Swiss banking sector when it was faced with a serious crisis of confidence.
It had first granted it a loan of around 50 billion Swiss francs (50.9 billion euros at current rates), then had participated in its rescue by negotiating alongside the other Swiss authorities its takeover by UBS , thus making available two liquidity lines of 100 billion each.
“It is crucial to learn the lessons of the crisis at Credit Suisse,” writes the SNB in this report.
“Repeated” incidents
Like UBS, Credit Suisse was classified as one of the banks considered too big to fail and therefore subject to stricter requirements.
“But the cause of this Credit Suisse crisis was not a macroeconomic shock as assumed in the SNB’s stress scenarios. Rather, this crisis was the result of repeated incidents within the bank itself” , notes the central bank.
Credit Suisse has been rocked by repeated scandals, which have tarnished its reputation. Despite a major restructuring project, the bank failed to reassure investors when panic took hold of the markets in mid-March in the wake of the bankruptcy of the American bank SVB.
This crisis raises more points, especially concerning the capital requirements that the bank was obliged to set aside to withstand the shock in the event of a crisis.
An analysis to be carried out
If these requirements were “necessary”, they were however “not sufficient”, according to this report from the SNB which recalls that the ratios of Credit Suisse were much higher than what is required by regulation.
She also observes that so-called AT1 bonds, complex instruments put in place following the 2008 financial crisis, only helped to absorb losses “when the point of non-viability was imminent” and that “the intervention of the State has become necessary”.
An analysis must therefore be carried out concerning the measures applicable to banks considered too big to fail, underlines the SNB.
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