n n n ‘. concat(e. i18n. t(“search. voice. recognition_retry”),’n
By John Revill and Noele Illien
BERN (Reuters) – Credit Suisse was on the verge of imploding months before it was bailed out, Switzerland’s monetary regulator said on Tuesday in its first detailed report on the crisis, as it called for more powerful powers to supervise lenders in the future.
Regulator FINMA, which has been criticized for its oversight of the bank, defended its role in the crisis that ultimately triggered the biggest bailout of a bank since the 2008-2009 global currency crisis.
The regulator said it had taken “far-reaching and invasive” measures to tackle Credit Suisse’s shortcomings as panicked consumers withdrew huge sums of cash after a series of losses and scandals.
But FINMA said its liquidity measures failed to save it from the bank’s imminent bankruptcy in mid-March 2023.
“FINMA used all the means at its disposal and knew from the beginning the threat of a possible destabilisation of Credit Suisse,” said Thomas Hirschi, head of the regulator’s crisis unit.
“While their moves have had an effect, they have failed to overcome the reasons for the loss of trust, such as deficiencies in strategy implementation and threat management. “
The regulator conducted 108 on site reviews at Credit Suisse from 2018 to 2022, and found 382 “points requiring action” – 113 where the risk was seen as high or critical.
“These figures and measures show that FINMA has exhausted its legal possibilities and powers,” it said in its report.
The regulator said it was seeking more powerful powers, adding the ability to impose fines and the ability to publish the main points of enforcement proceedings.
It also plans to put in place the so-called high-level control regime, a set of regulations that identify the express day-to-day jobs of senior managers, similar to the framework followed in Britain.
Interim CEO Birgit Rutishauser said FINMA would campaign “vehemently” for the increased powers, which she said were widely established and used internationally.
“Without those new tools, the likelihood of a primary bank collapsing again will be greater than if we had the new tools we are asking for,” he told a press convention in Bern.
The regulator will have 60 workers to oversee UBS and may simply increase that number, but the length of that backlog will depend on the new powers FINMA will get, Hirschi later told Reuters.
On the verge of collapse
FINMA’s report confirms details reported by Reuters on the extent of the bank’s frailty in the autumn of 2022.
Looking back at the crisis, Credit Suisse was on the verge of collapse at the end of 2022, and the long-suffering bank “very close on several occasions” to requesting 50 billion Swiss francs ($57. 72 billion) in emergency liquidity from the Swiss central bank, FINMA said. . Formation
The liquidity crisis prompted the Swiss National Bank to nationalise the lender at the time and inject 50 billion francs into Credit Suisse to keep it afloat, Reuters reported, six months before it was bought through UBS.
The bank had to act after withdrawing 138 billion francs in the fourth quarter, according to FINMA.
FINMA also revealed in March how dire the scenario was for Credit Suisse after the lender delayed the release of its annual report, regional banks in the United States collapsed and the Saudi National Bank said it would not increase its investments.
Credit Suisse also resisted some of the measures imposed through FINMA, the regulator said, even though it had provided false information, resulting in 16 criminal charges being brought against it over the years.
“It was only under repeated pressure from FINMA that Credit Suisse nevertheless established a reporting formula that allowed its control to monitor the implementation of the planned measures,” the report says.
Eventually, the Swiss government, the central bank and FINMA intervened in UBS’s acquisition of Credit Suisse, according to the report, achieving its purpose of protecting the bank’s creditors and ensuring monetary stability.
As part of the rescue, FINMA decided to write off 16 billion Swiss francs of Credit Suisse’s Additional Tier 1 (AT1) bonds – a controversial move which has triggered legal cases against the regulator.
FINMA defended the decision, saying the bonds had attractive returns because of the risks they carried, which investors knew.
UBS said it supports efforts to identify the root causes of Credit Suisse’s collapse and remains in contact with the government to share the percentage of lessons learned from the crisis.
Banking supervision will be even more in the spotlight, with FINMA overseeing Switzerland’s one remaining globally important bank – UBS – which has a balance sheet of $1.6 trillion – nearly twice the size of the entire Swiss economy.
“It is clear that within five to ten years the status of the Swiss monetary centre will be decided to a large extent by strengthening the existing legal basis for supervision,” said FINMA President Marlene Amstad.
($1 = 0. 8663 Swiss francs)
(Reporting by John Revill and Noele Illien, editing by Leslie Adler)