Head of Swiss financial watchdog wants more support from politicians

Stefan Walter says he is counting on parliament to authorise new funds. Keystone / Gaetan Bally

In the wake of the collapse of Swiss bank Credit Suisse, Stefan Walter, director of the Swiss Financial Market Supervisory Authority (FINMA), continues to insist on more expertise and more staff for the banking supervisory authority.

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He is counting on parliament to authorise new funds, he said in an interview with the Tamedia newspapers on Monday.

For example, he is once again calling for the possibility of penalising managers at fault and naming banks that are the subject of public proceedings. “You don’t just have to look at the Credit Suisse crisis. These possibilities are simply standard abroad,” Walter said. “All the authorities I have worked for have these tools. We must be able to do everything that has a preventative effect.”

+ Who’s to blame for the demise of Credit Suisse?

FINMA needs at least the authority to impose fines at the level of the banking institution, he said. Fines also have a preventative effect. “Incentives must be set in advance to encourage good behaviour.”

Another important element for Walter is early intervention, he stressed. You have to be able to intervene at an early stage, even if everything is still supposedly calm. “When customer money flows out, we are late. We need to know the risks and be able to intervene as early as possible.”

This could be achieved by FINMA comparing institutions with each other, including internationally, Walter said. “For example, we compare how they protect themselves against certain risks. Then we can quickly see who is falling behind in the field. We then tell the banks concerned and demand that they improve and catch up with the other institutions.”

+ FINMA director expects cooperation and transparency from banks

Although it is still too early for exact figures, FINMA also needs more people, he said. One important element at the moment is the cooperation with the auditors, he explained. “They carry out inspections at banks for us, when it would be central to FINMA’s work to carry out on-site inspections itself.”

Less dependence on auditors

However, the supervisory authority must be able to decide for itself when it wants to carry out an on-site inspection, he demanded. After all, “our own employees must also know the banks very well and not rely too much on the auditors’ reports”.

Following the Credit Suisse crisis, the Swiss government examined the regulation of systemically important banks and published a “too big to fail” report in April. It proposes various measures to reduce the risk to banking stability, including additional equity capital. The results of the Parliamentary Commission of Inquiry into the emergency merger of Credit Suisse with UBS are still outstanding and should also be included in the implementation.

However, the longer it has been since the end of Credit Suisse, the stronger the resistance from the industry has become: the Swiss Bankers Association has criticised a number of the measures proposed by the government. Last Thursday the industry association was particularly cautious about stricter regulations for banks’ own funds. It also rejects additional powers for FINMA.

Translated from German by DeepL/ts

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