Handling of Credit Suisse Collapse: Upcoming Report Overview

By Ariane Luthi and Oliver Hirt
ZURICH (Reuters) – A long-awaited report on how Swiss authorities managed the collapse of Credit Suisse is expected to be published soon, likely leading to stricter oversight of UBS, its new owner.

Once a cornerstone of the Swiss financial system and the second-largest bank in the country, Credit Suisse faced a series of scandals that ended with its state-engineered rescue by UBS in March 2023.

In June of last year, the Swiss parliament established a committee to investigate the official response to the bank's 167-year decline. The government expects the findings to contribute to new regulations to prevent similar crises, which officials attribute to mismanagement at Credit Suisse.

A central aspect of government proposals from April recommends that UBS and other major banks maintain higher capital reserves. However, UBS has warned that such measures could cloud its financial outlook.

Reports from the Swiss newspaper SonntagsBlick indicated that the parliamentary committee would refrain from recommending capital increases for banks.

While analysts like Andreas Venditti of Bank Vontobel believe the report will not directly affect UBS, its conclusions could influence public and political sentiment within Switzerland.

The parliamentary committee, known as PUK, has maintained a high level of secrecy, with leaks suggesting that criticism awaits regulators, particularly FINMA. Reports indicated that FINMA might have been able to exert more control over the bank as its troubles grew. FINMA has claimed it needs enhanced powers, which the government is advocating for.

The PUK plans to release its report by the end of 2024, though a spokesperson indicated it should arrive this year.

Media reports suggest the Swiss National Bank (SNB) and its former chairman, Thomas Jordan, may also face reproach for their insufficient actions. Jordan had previously backed the idea of nationalizing the bank, a plan halted due to FINMA and Credit Suisse's opposition. Critics believe he could have been more proactive in publicly supporting the bank.

Switzerland's finance ministry and SNB have opted not to comment on the matter. FINMA acknowledged that while it had utilized its resources extensively regarding Credit Suisse, it was less equipped compared to its international counterparts for interventions. They stated that for more effective supervision, Switzerland would need new tools and earlier intervention capabilities.