The Swiss parliamentary investigation into the collapse of Credit Suisse sounds the death knell of FINMA’s principles-based regime.
Hundreds of pages of reports examining what happened can also be boiled down to a glaring finding – a regulatory filter that significantly skewed the now-defunct bank’s capital ratio to the point that it was far below required minimums by late 2022.
In that way, the downfall bears some parallels to 15 years earlier, when UBS, Switzerland’s largest bank, was brought down by an easily overlooked line in its balance sheet called «Other» chock full of subprime mortgages – and worse.
Obsessive Detail
So where do we go from here? The reports lay everything bare in excruciating detail, stressing the societal significance of the two events in 2008 and 2023 in the introduction.
The effort is laudable and thorough, but it is by no means early, and the all-around political backslapping that the right choices were made in the context of the situation could have been more restrained.
More Power
The commission blames the crisis squarely on Credit Suisse’s conduct and its more than questionable risk culture and governance.
As a result, FINMA is likely going to get more enforcement powers, be able to impose fines and have more tools to intervene at an earlier stage when a crisis hits.
Supervising Conduct
In the regulator’s own words, that will allow it to strengthen supervision in a way that makes it more comparable to its international peers.
But conduct is a difficult one to manage and supervise - and some other, larger financial hubs have entire authorities dedicated to managing the pesky matter of behavior.
The Last Bank
Still, it is a start – although, at the same time, we are also at a dead end.
From here on out, there are no more excuses – or any banks big enough left that can come to the rescue.
