Geneva, Switzerland:
Swiss financial regulator Finma is looking into holding Credit Suisse bosses accountable following its bailout takeover by rival UBS, a media report said on Sunday.
“We are not a criminal authority, but we are investigating the corresponding possibilities,” said Finma chairman Marlene Amstad in an interview with the weekly magazine NZZ am Sonntag.
Switzerland, whose vibrant banking scene is an important part of the country’s culture, has been shaken to the core by the forced merger of Credit Suisse with UBS at the behest of the government.
A number of observers have expressed fears that the new entity to emerge from the shotgun marriage will be not so much too big to fail as too big to succeed – though the SNB’s central bank insists the merger has sparked a wider banking crisis prevent.
Amstad — noting that the new entity’s capital and liquidity needs should gradually grow in line with its new size — didn’t hold back the criticism of the culture that had led to its predicament.
The turmoil adds to the broad banking turbulence brought on by the recent collapse of three US banks.
“The problems were not limited to a single part of the company, but spread across different sectors of the group and reflected an overall inadequate risk culture,” added Amstad.
He said this translated into a general lack of accountability.
She acknowledged that “there is no doubt that the bank has a lot of employees who work reliably and correctly”, but said this was not enough.
Credit Suisse chairman Axel Lehmann had tried to pin some of the blame for the bank’s problems on social media, something Amstad rejected.
“The social media storm was clearly not the source of the problem at Credit Suisse. They go way back.
“The causes were several scandals and management errors in recent years,” she said.
“The bank was already in a reputation and confidence crisis. At the end of the day, (Credit Suisse) went bankrupt due to numerous scandals and poor management decisions.
“The bank’s management has long adhered to a risky strategy, but has been unable to adequately address those risks.
“The problems lasted for several years,” Amstad said, adding that she “didn’t name names.”
Some industry observers have blamed authorities for not acting sooner, but Amstad said Finma was working behind the scenes and its actions were not always made public.
She concluded by emphasizing, “Flawed corporate culture and strategic errors of judgment on the part of management cannot be completely eliminated by strict regulation.”
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