Plnc report on the Credit Suisse crisis: Drawing the right lessons now
The Swiss Bankers Association (SBA) welcomes the fact that the Parliamentary Investigation Committee (PInC) has examined the legality, expediency, appropriateness, effectiveness, and collaboration of the relevant authorities and institutions. Together with the Federal Council’s report on banking stability, the PlnC report forms a crucial part of the overall assessment.
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The report highlights three key factors crucial for financial stability: responsible management, effective supervision, and robust liquidity provision.
- Management: The Credit Suisse crisis stems primarily from years of mismanagement, leading to a significant loss of confidence in the bank. To address this, it is essential to establish clear competencies and responsibilities, along with remuneration principles that encourage long-term, sustainable management. Any potential changes should be targeted and proportionate.
- Supervision: We concur with the PUK’s assessment that the Swiss Financial Market Supervisory Authority (FINMA) has not consistently maximized the use of its resources. This represents the primary area for improvement, rather than introducing additional regulatory tools. We welcome the emphasis on strengthening cooperation between the authorities.
- Liquidity: We agree with the PUK’s recommendation to significantly strengthen liquidity provision to ensure financial stability. This requires enshrining the Public Liquidity Backstop (PLB) for systemically important banks into ordinary law, while also expanding and destigmatizing the Swiss National Bank’s (SNB) liquidity facilities for all banks.
«The PlnC report provides a valuable opportunity to draw the right lessons from the Credit Suisse crisis. Achieving this requires intelligent regulation that prioritizes responsible management, effective supervision, and robust liquidity provision. This will safeguard a strong and stable international financial center, supporting Switzerland's long-term prosperity.»
The SBA will now analyse the PInC report in depth, with a view to the ongoing political and regulatory discussion on bank stability. It is liaising closely with politicians and the authorities and will involve itself actively and constructively in the ongoing discussions.
Further information, as well as the SBA’s positions on the takeover of CS by UBS, can be found here.