Before the next crisis – Finma and UBS: How do you control a giant? -News


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With more skills it can do more, says the financial market regulator. Experts are critical.

Since the collapse of Credit Suisse, the financial market regulator Finma has been criticized. She attempted to liberate the situation with her report in December.

Finma’s demands


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On December 19, 2023, the Financial Markets Authority presented its 89-page report on the lessons from the Credit Suisse crisis.

She emphasizes: “FINMA carried out its supervision of CS very intensively and with great effort within the framework of the applicable legal requirements.”

Because this was not enough, she is calling for more skills:

  • a Senior manager regime: the opportunity to hold managers more accountable
  • one Bus competence
  • the permission, Communicate more aggressively about enforcement procedures to be allowed
  • the possibility, Remuneration measures to arrange

For Markus Diem Meier, this behavior from Finma seems familiar: “Even at Greensill or Archegos [ein Lieferketten-Fonds und eine Hedgefonds, die Milliarden-Abschreiber nach sich zogen, Anm. d. R.] “She listed in detail the warnings she had issued,” says the editor-in-chief of the “Handelszeitung” in “Eco Talk”.

“But the point is: nobody at CS was interested. She even records it herself.” The problem: Finma can’t really “bite”.

Florence Vuichard, who heads the economics department at CH Media, believes that fines could help “sell a fine”: “Being able to say a billion or 500,000 is easy. Because nobody reads such an enforcement procedure.”

The enforcement procedure is a tool that Finma can initiate if there is suspicion of a violation of supervisory law. It can lead to the loss of a banking license or a professional ban for individuals.

Legend:

Finma management will present its Credit Suisse report on December 19, 2023. From the right: Birgit Rutishauser (then interim director), Board President Marlene Amstad, Thomas Hirschi, Head of the Banking Division, and Alain Girard, Head of the Recovery and Resolution Division.

Keystone / Peter Schneider

“Finma certainly doesn’t have an easy job,” says Suzanne Ziegler, professor of banking and finance at the Zurich University of Applied Sciences ZHAW. But: “I’m not sure whether fines would have an effect. Because who pays for it in the end? This is the bank or an insurance company. Certainly not the people themselves.”

Expand warranty checks

Suzanne Ziegler says that Finma already has an opportunity that it is not exploiting. “It carries out guarantee checks, for example, on people who come onto a board of directors. That could be expanded.”

You could, for example, check your technical know-how. In Great Britain, “hard tests” are already being carried out to assess whether candidates have the necessary specialist knowledge.

With Tidjane Thiam and Urs Rohner, for example, people who did not originally come from the banking industry held key positions at Credit Suisse from 2015 to 2020. CEO Tidjane Thiam came from the insurance company Prudential. Urs Rohner already held a managerial position at the major bank, but he is a lawyer by training.

“No hedging” at UBS

Markus Diem Meier says about the current UBS: “I don’t see any risk in the latest figures. But we have no protection if things go in the wrong direction again. And that worries me.”

Because all three agree with one statement: there will be another banking crisis. “We have to live with it,” says Suzanne Ziegler from the ZHAW, who did her doctorate on the subject of “banks in distress”. «There will always be banking crises. And we have no guarantee that UBS will do anything different.”

“Maybe we just have to minimize the damage as much as possible,” says Florence Vuichard from CH Media. She has hopes for the Federal Council’s “too-bit-to-fail” report, which is due to appear this spring.

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