Swiss Regulator Probes Credit Suisse's Final Months

In a significant development concerning the financial landscape of Switzerland, the Swiss financial market regulator, FINMA, has initiated an audit into the operations of Credit Suisse during its final months. This investigation comes in the wake of Credit Suisse's acquisition by its rival UBS in March 2023, a move that marked a pivotal moment in the banking sector. The audit aims to scrutinize the events leading up to this merger, particularly focusing on the 15 months preceding it.

According to reports, FINMA has already interviewed nearly a dozen current and former employees from both Credit Suisse and UBS as part of this audit. The law firm Wenger Plattner has been commissioned to conduct these interviews, which are crucial in understanding how Credit Suisse managed its crisis. The investigation seeks to determine whether the management of Credit Suisse misled authorities during this tumultuous period.

Key questions being explored include when it became evident that Credit Suisse was beyond saving, the state of the bank's liquidity, and the overall health of its equity. These inquiries are essential for assessing the bank's management practices and the decisions made in the lead-up to its collapse. In a previous report released in December, FINMA indicated that Credit Suisse was on the brink of failure months before its takeover, highlighting the need for stronger regulatory powers to oversee banking institutions.

Furthermore, a Swiss parliamentary committee is also investigating how authorities responded to the crisis surrounding Credit Suisse. Their findings are expected to be published later this year, which could lead to significant discussions in Parliament regarding the measures needed to prevent a similar situation in the future. In April, Swiss authorities proposed a series of measures, including stricter capital requirements for UBS, aimed at safeguarding the financial system.

Critics of the Credit Suisse takeover argue that the Swiss authorities had the opportunity to keep the bank operational as an independent entity but failed to act swiftly enough. They contend that greater assurances could have been provided to ensure the bank's survival. On the other hand, authorities have defended their actions, attributing the collapse to internal failures within Credit Suisse.

This ongoing investigation serves as a reminder of the complexities involved in managing large financial institutions and the critical role of regulatory bodies in maintaining stability within the banking sector. As the situation unfolds, it will be interesting to see how the findings of FINMA and the parliamentary committee will shape the future of banking regulations in Switzerland and whether they will lead to more robust safeguards against potential crises.