The Swiss Financial Market Supervisory Authority (FINMA) released a damning report on Tuesday, revealing severe deficiencies in its oversight of Credit Suisse.
The report points to critical failures in risk management, corporate governance, and risk culture within the bank, highlighting the inadequacy of measures previously put in place.
This disclosure underscores FINMA’s commitment to ensuring the stability of Credit Suisse, alongside the Swiss government and the Swiss National Bank.
Despite having implemented “far-reaching and invasive measures” over the years, FINMA’s repeated warnings, particularly those issued since the summer of 2022, were ignored by the bank.
The regulator is now advocating for a stronger legal basis to rectify this situation, endorsing tools such as the Senior Managers Regime, the authority to levy fines, and stricter corporate governance regulations.
Credit Suisse’s strategic efforts to reduce risk, including downsizing its investment bank and shifting focus to asset management, came under scrutiny for their inconsistent implementation.
The report also noted that the bank’s reputation suffered from repeated scandals, and even during periods of financial losses, employee remuneration remained disproportionately high.
In response to Credit Suisse’s numerous failures, FINMA conducted 43 preliminary investigations, issued nine reprimands, filed 16 criminal charges, and initiated 11 enforcement proceedings against the bank and three individuals.
Despite conducting 108 on-site supervisory reviews and identifying 382 areas requiring action between 2018 and 2022, the report revealed that FINMA’s options and legal powers had been exhausted.
Credit Suisse attributed its loss of confidence to market panic triggered by the collapse of Silicon Valley Bank in the U.S.
However, FINMA firmly believes that the bank’s shortcomings extend beyond this external event.
To address these issues, FINMA is calling for expanded regulatory options, including the implementation of a Senior Managers Regime, the authority to impose fines, and increased transparency through the regular publication of enforcement proceedings.
The report concludes that a more robust legal mandate is essential for effectively intervening in remuneration systems.
Credit Suisse, an institution with a history spanning 167 years, faced a series of risk management failures and scandals that ultimately led to its rescue by domestic rival UBS in March, facilitated by Swiss authorities.
The report underscores the gravity of oversight lapses and highlights the urgent need for regulatory reforms within the Swiss banking sector.
Previously, a 14-member parliamentary commission had launched an investigation into the Credit Suisse collapse, three months after Swiss lawmakers rejected a CHF 109 billion government rescue package for UBS to acquire the troubled bank.
This investigation aimed to scrutinize the actions of public authorities, including the Swiss National Bank and FINMA, during and before the emergency acquisition.
The commission has an 18-month timeframe to report its findings and recommendations to the Swiss government and parliament.