Switzerland will tighten bank regulation after the collapse of Credit Suisse – Kommersant

The Swiss Federal Council (Government) published a 209-page report, detailing all the changes needed to prevent the Credit Suisse situation. His Swiss authorities had to save in the spring of 2023, forcing UBS to buy out a troubled competitor on the brink of collapse.

The report outlines a package of 22 measures that need to be taken against the country’s critical banks. In particular, the government considers it necessary to strengthen the powers of the banking regulator Finma, finally giving it the ability to fine banks, as is customary in most European countries and the United States. At the same time, the government intends to oblige the regulator to publicly report on all supervisory procedures. It is also assumed that Finma will be able to impose requirements on banks regarding the size of bonuses to management and limit their size.

In addition, the government insists on introducing personal responsibility for top managers for making certain decisions or inaction. It is proposed to tighten the requirements for bank capital and liquidity. Moreover, we are talking not only about the country’s critically important banks themselves, but also about their foreign shareholders.

Some measures follow directly from the Credit Suisse rescue process. Thus, the government intends to introduce a state liquidity support system for systemically important banks. The provision of funds to Credit Suisse in early 2023 was only possible through the application of emergency legislation. In addition, the authorities propose to introduce a clear list of situations in which suspension of payments on AT1 type bonds is possible. As part of the deal between UBS and Credit Suisse, by order of the authorities, the value of all AT1 bonds issued by Credit Suisse was written off—about 16 billion Swiss francs. Subsequently, this decision became the subject of numerous lawsuits both to Finmaand to brokerswho sold bonds of a Swiss bank.

Kirill Sarkhanyants