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The PUK report on the Credit Suisse crisis is anticipated to reveal shortcomings in the oversight by FINMA and other authorities, with speculation about its findings being tightly controlled due to legal liabilities. The report will likely address the failures of key figures, including FINMA Chairwoman Marlene Amstad and former officials Thomas Jordan and Ueli Maurer, while also examining the implications for too-big-to-fail legislation. An international comparison of financial supervision will inform recommendations for future regulatory frameworks.
The imminent PUK report will investigate the causes behind Credit Suisse's collapse in March 2023, focusing on the roles of key authorities like FINMA, the Swiss National Bank, and the Federal Department of Finance. The commission, led by Isabelle Chassot, has conducted over sixty interviews and will address regulatory failures and the need for reforms in the Swiss financial system. Following its publication, the findings will inform legislative changes and regulatory measures to prevent future banking crises.
Tensions rise ahead of the Credit Suisse investigation report, with former Finance Minister Ueli Maurer facing scrutiny for his inaction during the crisis. Current Minister Karin Keller-Sutter is seen as a decisive figure, while former executives like Axel Lehmann grapple with legal uncertainties. The report may intensify potential legal actions against those involved.
In the summer of 2022, Credit Suisse engaged in challenging negotiations with the Swiss Financial Market Supervisory Authority (Finma) regarding the sale of its investment banking division, a move aimed at revitalizing the bank. The plan, proposed by the new management team led by CEO Ulrich Körner, was ultimately rejected due to the need for regulatory changes. This period of intense discussion followed the leadership transition from Chairman Antonio Horta-Osorio to Axel Lehmann and the appointment of Körner in July.
Axel Lehmann, the former Chairman of Credit Suisse, has faced criticism for offering crisis management advice on LinkedIn after the bank's takeover by UBS. His tips, which emphasize recognizing the full extent of a crisis and considering soft factors in decision-making, have been met with skepticism, with users questioning why he didn't apply these principles during his tenure. Credit Suisse's fate was sealed on June 12, 2023, marking a significant moment in the European financial sector.
Ulrich Körner, head of Credit Suisse, faced criticism for his handling of the bank's crisis, particularly after a failed "Körner Plan" that aimed to address a significant capital shortfall. Despite receiving regulatory leniency, the bank's equity was insufficient, leading to a massive outflow of funds and a plummeting share price. As the Parliamentary Commission of Inquiry prepares to release its findings, Körner's attempts to shift blame may not shield him from accountability for the bank's failures.
The Körner plan aimed to drastically wind down Credit Suisse's investment bank but was rejected by FINMA, which required compliance within existing regulations. Despite intense discussions, CS's request for a more favorable valuation method was denied, leading to a parallel, less ambitious plan that ultimately failed to restore market confidence.
Switzerland faces a legal challenge in New York regarding the collapse of Credit Suisse, as AT1 bondholders seek restitution for their losses. The trial has been delayed due to the complex legal questions surrounding Switzerland's ability to be sued in this context.
Finma has suspended the approval of UBS's recovery and resolution plans due to the integration of Credit Suisse, necessitating adjustments to the bank's emergency liquidation strategies. UBS is currently revising its plans, emphasizing its robust business model and loss-absorbing capacity of approximately $200 billion. The suspension follows a secret investigation into the CS takeover, involving testimonies from key UBS and CS executives.
Axel Lehmann
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Parliamentary Commission Report to Examine Credit Suisse Crisis and Regulatory Failures
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06:54 10.12.2024
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