Swiss financial regulator wants more power after Credit Suisse collapse

FINMA intensified its supervisory activities over Credit Suisse in recent years but reached the legal limits according to a report on the downfall of the Swiss bank. © Keystone / Peter Klaunzer

Swiss financial market supervisory authority FINMA is calling for tougher instruments as a consequence of the downfall of Credit Suisse. This includes, for example, the option for it to impose fines.

FINMA would also like to see improvements in capital regulation as part of the “too-big-to-fail” requirements. Stricter standards are needed at the level of the individual institution, writes the supervisory authority in a report on lessons learnedExternal link from the Credit Suisse crisis published on Tuesday.

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

Due to the accumulation of problems and deficiencies at Credit Suisse, which was taken over by UBS in March 2023, FINMA intensified its supervisory activities in recent years and imposed ever more drastic measures, according to the report. In doing so, it went to the limits of its legal possibilities.

Strategy and management failures

Credit Suisse failed due to shortcomings in strategy and management, FINMA concludes in the report. “Serious deficiencies in risk management played a role in practically all of the problems.” Due to reorganisations as well as high costs, fines and losses, Credit Suisse had to repeatedly raise capital. At the same time, Credit Suisse’s major shareholders had hardly exercised their influence on remuneration.

In its report, FINMA emphasises that it has exercised its supervision of Credit Suisse very extensively within the framework of the applicable legal requirements. Since 2012, it has conducted 43 preliminary investigations into Credit Suisse for possible enforcement proceedings.

It issued nine reprimands, filed 16 criminal complaints and concluded eleven enforcement proceedings against the bank and three against natural persons. Between 2018 and 2022 alone, FINMA carried out 108 on-site inspections at the bank and identified 382 points requiring action.

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