ZURICH, March 26 (Portal) – Switzerland’s financial regulator FINMA is considering taking disciplinary action against managers at Credit Suisse (CSGN.S) after Switzerland’s second largest bank had to be bailed out by UBS (UBSG.S) last week.
FINMA President Marlene Amstad told the Swiss newspaper NZZ on Sunday that it was “still open” whether new procedures would be initiated, but the main focus of supervision was on the “transitional phase of integration” and “maintaining financial stability”.
UBS agreed a week ago to buy Credit Suisse for 3 billion Swiss francs ($3.26 billion) in shares and up to 5 billion francs in losses in a deal announced by Swiss regulators during a time of market turmoil in global banking to take over the merger carried out.
Credit Suisse on Sunday declined to comment on the FINMA president’s comments when asked for a reply by Portal.
Asked if FINMA was considering holding current managers at Credit Suisse accountable for the collapse of Switzerland’s second-largest bank, Amstad said it was “assessing the options”.
“CS had a cultural problem that was reflected in irresponsibility,” Amstad was quoted as saying by the NZZ, adding: “Numerous mistakes were made over several years.”
FINMA has conducted six public “enforcement proceedings” against Credit Suisse in recent years, said Amstad.
“We intervened and used our strongest tools,” she said of her earlier moves.
Amstad also defended Switzerland’s decision to write down 16 billion Swiss francs of Credit Suisse Additional Tier 1 (AT1) debt to zero as part of the forced rescue merger.
“The AT1 instruments are contractually written off in full in the event of a trigger event, specifically the granting of extraordinary government support,” Amstad said.
“The bonds were created for just such situations.”
In a separate interview with the Swiss Sunday newspaper, FINMA CEO Urban Angehrn defended his role in dealing with Credit Suisse before the takeover.
“We intervened consistently in these cases, used our instruments and they worked,” he said. “We do not run the bank, this responsibility lies with the board of directors and the management of the bank.”
Angehrn also said that there were open discussions about expanding FINMA’s powers, such as the possibility of imposing fines, which it currently does not have despite “sharp instruments”.
“We do not have a ‘senior manager regime’ that could help with the issue of manager responsibility and FINMA is limited in communicating cases.”
($1 = 0.9199 Swiss Francs)
Reporting by Noele Illien; Editing by Alexander Smith
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