The recent parliamentary inquiry into Credit Suisse has revealed significant mismanagement that led to the bank's downfall in March 2023. The blame for this mismanagement lies with Credit Suisse's Board of Directors and management, who failed to respond adequately to warnings and interventions from the Swiss Financial Market Supervisory Authority (Finma).
The inquiry found no direct faults with the federal authorities but highlighted accumulated shortcomings that contributed to the crisis. The report emphasizes the need for significant reforms in banking regulation to prevent similar crises in the future.
In light of the inquiry's findings, the commission has made twenty recommendations to enhance banking regulation in Switzerland. These recommendations focus on legislative and implementation levels and urge the federal authorities to learn from the crisis management.
The report suggests that the Federal Council and Parliament have been cautious in their approach to systemic banks, particularly regarding too-big-to-fail (TBTF) regulations. Delays in decision-making and adaptations to international standards are identified as critical shortcomings that need to be addressed.
The report highlights the need for a public liquidity guarantee mechanism and criticizes the Federal Council for hesitating to introduce such a mechanism. The inquiry also points out that Finma's supervision had limited effectiveness, as Credit Suisse continued to face scandals despite warnings.
The commission regrets that Finma did not take more decisive action, such as withdrawing the bank's certificate of irreproachable activity, which could have restored confidence among investors and stakeholders.
A lack of coordination among various authorities and stakeholders contributed to the crisis. The report suggests that if there had been better communication and information sharing, timely interventions could have been made.
Despite the challenges faced, the commission acknowledges the preliminary work done by federal authorities to analyze various scenarios for resolving the crisis. The importance of preparedness and proactive measures in the face of financial instability is highlighted.
The inquiry raises concerns about the implications of the TBTF legislation, particularly in light of Credit Suisse's systemic importance. The commission points out that Switzerland is now left with only one globally systemically important bank, highlighting the need for a reevaluation of the TBTF framework.
The report argues that the current TBTF legislation is overly focused on domestic considerations and neglects the international dimensions of banking operations. It calls for a review of relief measures related to capital and liquidity requirements, suggesting that such relief should be limited to ensure the stability of the financial system.
In summary, the parliamentary inquiry into Credit Suisse has uncovered management failures that led to the bank's crisis. The report calls for regulatory improvements and enhanced coordination among authorities to create a more resilient banking sector in Switzerland. The recommendations serve as a call to action for regulators and financial institutions to learn from past mistakes and implement necessary reforms to prevent future crises.