A recent report has shed light on the handling of the Credit Suisse (CS) crisis by the Swiss Financial Market Supervisory Authority (FINMA). The report, titled “Lessons Learned from the CS Crisis,” spans 89 pages and aims to absolve FINMA of any blame in the downfall of the country’s second-largest financial institution.
However, the report’s claims of early recognition of the potential destabilization risks and intensified supervision by FINMA seem to be nothing more than a fairy tale. In reality, FINMA continued to assist CS with exceptional rules to keep the bank afloat until the very end.
As of September 30, 2022, the banking regulator allowed the CS management to reduce the required capital buffers. Furthermore, when the bank’s foreign investments collapsed and its main entity, CS AG, faced difficulties, FINMA accepted a sudden CHF 9 billion valuation increase for CS Schweiz AG.
Instead of reprimanding CS executives for their actions, FINMA provided central support in covering up their missteps. The report attempts to divert attention from the fact that FINMA itself suffered a complete breakdown in the CS case.
The Wall Street Journal (WSJ) highlighted this issue in a major story, titled “How a Banking Capital of the World Botched Its Own Banking Rules.” The article focused on the exceptional rules granted by Swiss authorities to their two major banks, which relaxed the requirements for minimum capital and reserves in case of emergencies.
Contrary to popular belief, the so-called “Swiss Finish” did not imply stricter regulations but rather looser ones. The report reveals that FINMA granted CS a one-third reduction in capital requirements, leading to the bank’s eventual collapse on March 19, 2023.
The purpose of the current report is to exonerate FINMA from any blame or responsibility in the CS crisis. However, the findings raise questions about the effectiveness and integrity of the Swiss financial regulatory system.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | Europe |
| Countries | 🇨🇠|
| Sentiment | very negative |
| Relevance Score | 1 |
| People | None |
| Companies | Bankenaufsicht, Wall Street Journal, CS-Führung, CS AG, Investmentbank, Finma, CS Schweiz AG, Expertenkommission, CS |
| Currencies | None |
| Securities | None |
