The recent investigation into the collapse of Credit Suisse has revealed deficiencies in the oversight provided by the Swiss banking regulator, Finma.

Responsibility for the Collapse

The bank's Board of Directors and management were found to be primarily responsible for the loss of confidence that led to its downfall.

Role of Swiss Authorities

The inquiry also examined the role of Swiss authorities in the rescue of Credit Suisse, dating back to 2015.

The urgency of the situation increased in March 2023 after the collapse of three U.S. banks, prompting a swift response from the Swiss finance ministry, central bank, and Finma.

Regulatory Practices

The investigation found that Finma's regulatory practices were partially inefficient, particularly in granting capital relief to Credit Suisse in 2017.

This relief was crucial for the bank to meet regulatory requirements in subsequent years.

Without this assistance, Credit Suisse would have faced significant challenges by 2021 and would have been unable to comply with necessary standards by 2022.

Despite Finma's warnings and procedures, the commission criticized its failure to revoke the "certificate of irreproachable activity," a vital credential for banks operating in Switzerland.

Rescue and Regulatory Framework

Their decision to facilitate a takeover by UBS aimed to stabilize the financial landscape.

The commission's report also criticized the regulatory framework for "too big to fail" banks, highlighting the government and parliament's excessive focus on the demands of large financial institutions.

This led to a hesitant implementation of stricter rules.

The report emphasized the importance of learning from this crisis, given Switzerland's historical interventions in the banking sector.

Views on Regulation and Accountability

Following the inquiry, UBS Chairman Colm Kelleher expressed concerns about the tightening of regulations, warning that it could disadvantage the bank compared to its international peers.

The Swiss Bankers' Association called for enhanced resources for banking supervision and attributed the collapse of Credit Suisse to the actions of a few "unscrupulous senior executives."

This highlights the ongoing debate about accountability in the banking sector and the role of regulatory bodies in corporate governance.

Lessons Learned

The lessons learned from the Credit Suisse collapse will likely shape future regulatory frameworks and industry practices.