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The collapse of Credit Suisse, attributed to years of mismanagement, prompted a Swiss parliamentary inquiry that criticized both the bank's leadership and the supervisory authority, Finma. The findings may lead to stricter regulations for systemically important banks, potentially requiring UBS to reserve an additional $15 billion to $25 billion in capital.
A parliamentary commission of inquiry has found that Swiss authorities made significant errors leading to the collapse of Credit Suisse, attributing the loss of trust primarily to the bank's Board of Directors and Executive Board. The investigation revealed that the Financial Market Supervisory Authority (Finma) granted excessive capital relief and failed to act decisively, while the government was criticized for its lack of transparency. In response, the Swiss government plans to reform banking regulations, including stricter capital requirements, and has proposed 30 recommendations to prevent future crises.
Credit Suisse, a traditional Swiss bank established in 1856 by Alfred Escher, faced a significant crisis that culminated in its forced sale to UBS in March 2023. This event marked a dramatic decline for the institution, driven by a series of critical milestones leading to its downfall.
UBS Group AG is considering job cuts in France due to a weakening economy and the integration of Credit Suisse. The bank's spokesman noted that the restructuring is linked to a less favorable market environment and is currently being discussed with the works council. French business confidence has declined, and the economy is projected to grow only 0.2% per quarter in the first half of next year.
UBS Group AG is considering job cuts in France due to a weakening economy and the ongoing integration of Credit Suisse. The bank's spokesman noted that the restructuring is linked to a less favorable market environment and follows a drop in French business confidence, with the economy expected to grow only 0.2% per quarter in early 2024. The plan is currently being presented to the works council, with support measures for affected staff to be developed in collaboration with employee representatives.
The Credit Suisse crisis highlights the limitations of Switzerland's high-precision financial market regulation. While the Swiss excel in meticulousness, this approach may hinder their ability to address complex, long-term financial issues effectively. A shift in focus towards the broader purpose of regulation is essential for the financial center's future.
The Parliamentary Commission of Inquiry into Credit Suisse has concluded that senior management failed in their duties, prompting recommendations for stricter regulations on banks, including UBS. While UBS has adopted a more conservative approach post-takeover, concerns remain about potential future risks and the implicit state guarantees that could encourage reckless behavior. The effectiveness of new regulatory tools and the responsibility of systemically important banks towards the Swiss economy are critical for preventing future crises.
The parliamentary commission of inquiry into the collapse of Credit Suisse, involving Basel politicians Maya Graf and Daniela Schneeberger, criticized the bank's management for significant errors and the Swiss Financial Market Supervisory Authority (Finma) for its inadequate intervention. Graf emphasized the need for stronger regulatory tools for Finma and improved cooperation among federal authorities to prevent future crises. The PUK report has been submitted to the Swiss Parliament for discussion in the upcoming spring session.
The ICC's report on the March 19, 2023, write-off of AT1 bonds, totaling 16 billion francs, has drawn criticism for its lack of accountability and failure to address misleading statements from Credit Suisse's management. Over 3,000 investors are still awaiting responses from the Federal Administrative Court regarding their appeals against Finma's decision, with many now looking to the U.S. justice system for recourse. Dario Item, a financial law expert, expressed disappointment in the ICC's superficial conclusions and the prolonged delays faced by investors.
Credit Suisse's collapse in March 2023 was attributed to years of mismanagement, with the Parliamentary Commission of Inquiry highlighting the board's failure to heed regulatory warnings. While federal authorities were found to have shortcomings, they acted decisively to prevent a broader financial crisis during the UBS takeover. The report emphasizes the need for improved oversight and timely decision-making in the banking sector.
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