Credit Suisse risks disciplinary action, says the Swiss regulator

ZURICH, March 26 (Reuters) – Swiss financial regulator FINMA said it was considering disciplinary action against managers at Credit Suisse (CSGN.S) after Switzerland’s second largest bank had to be bailed out by UBS (UBSG) last week .S).

FINMA president Marlene Amstad told Swiss newspaper NZZ am Sonntag that it was “still open” whether new procedures would be launched, but the regulator’s main focus was on “the transition phase of integration” and “maintaining financial stability”.

UBS agreed to buy Credit Suisse a week ago for 3 billion Swiss francs ($3.26 billion) and take up to 5 billion francs in losses in a merger engineered by Swiss authorities during a period of market turmoil in global banking.

Credit Suisse declined to comment on the FINMA president’s comments on Sunday when Reuters asked for a response.

Asked if FINMA is considering holding Credit Suisse’s current managers responsible for the collapse of Switzerland’s second-largest bank, Amstad said it was “examining the options”.

“CS had a cultural problem that translated into a lack of accountability,” Amstad told NZZ, adding, “There have been countless mistakes made over several years.”

FINMA had conducted six public “enforcement proceedings” against Credit Suisse in recent years, Amstad said.

“We stepped in and used our strongest tools,” she said of her previous 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 bailout merger.

“The AT1 instruments contractually stipulate that they will be fully amortized in the event of a trigger event, in particular the granting of extraordinary government assistance,” said Amstad.

“The bonds are exactly made for such situations.”

In a separate interview with Swiss newspaper SonntagsZeitung, FINMA CEO Urban Angehrn defended his role in dealing with Credit Suisse prior to the acquisition.

“We consistently intervened in these cases, used our tools and they had an effect,” he said. “We do not run the bank, that responsibility lies with the board of directors and the management of the bank.”

Angehrn also said there are open discussions about broadening FINMA’s powers, such as its ability to impose fines, despite the fact that it currently lacks “sharp tools”.

“We don’t have a ‘senior manager regime’ that would help with the issue of manager accountability, and FINMA is limited in communicating matters.”

($1 = 0.9199 Swiss Francs)

Reporting by Noele Illien; Edited by Alexander Smith

Our Standards: The Thomson Reuters Principles of Trust.


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