Bank / Credit Union

Swiss regulator calls for better regulations following near Credit Suisse collapse

Photo: Timon - stock.adobe.com

December 19, 2023

The Financial Market Supervisory Authority, a Swiss regulator, has called for additional powers to prevent bank collapses, following the near collapse of Credit Suisse earlier this year, according to a report by Reuters. The bank avoided shutdown in March when it was acquired by UBS.

Credit Suisse was involved in a number of scandals over the years, such as when a court ruled in 2020 that the bank hadn't prevented money laundering by a Bulgarian cocaine trafficking gang.

The FINMA (as the regulator is known) has been criticized for not doing enough to keep Credit Suisse afloat, but Thomas Hirschi, head of the crisis unit for FINMA, maintains it "used the full range of tools available to it, and identified the risk of possible destabilization at Credit Suisse at an early stage. Although its actions had an effect, they were unable to overcome the causes of the loss of confidence, such as shortcomings in strategy implementation and in risk management."

The regulator has asked for the ability to impose fines, publish details of enforcement proceedings and implement rules for senior executives called a senior managers regime.

"Without these new instruments, the probability of a major bank collapsing again will simply be higher than if we have these new instruments that we are demanding," Birgit Rutishauser, interim CEO of FINMA, said in the report.