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Switzerland has released a parliamentary report on the collapse of Credit Suisse, which has raised concerns about the country’s financial stability and sparked questions about what went wrong. The report, which took 18 months to complete, has made 30 recommendations and requests to prevent a similar crisis in the future. Some of the key recommendations include:
1. UBS and Too-Big-To-Fail: The report suggests that the government should take into account the size of UBS in relation to the Swiss economy when developing its “too-big-to-fail” rules. This is to ensure that the Swiss financial system is viable and can prevent international financial crises. However, the report does not provide any specific suggestions on how much more capital banks like UBS should hold.
2. Rein in Bosses: The committee has concluded that Credit Suisse’s management was primarily responsible for the crisis and has recommended that the government consider imposing measures on systemically relevant banks. These measures include limiting bonus payments when business is going badly, giving shareholders more say on stability issues, and introducing a compulsory 10-year residence requirement for a majority of board members.
3. Financial Regulation: The report has criticized the financial regulator FINMA for being too lenient on Credit Suisse. It has recommended that the government introduce measures to prevent banks from easing capital and liquidity requirements in the future. It has also suggested giving FINMA more powers, such as the ability to fine managers and order temporary restrictions on dividends and share buybacks. The report also proposes empowering the Swiss National Bank to force systemically important banks to prepare for extraordinary liquidity assistance.
4. Audit Oversight: The report has proposed leaving audit oversight for systemically important banks solely in the hands of FINMA, instead of the current arrangement where it is shared with another body known as RAB.
The report has highlighted the need for stricter regulations and oversight in the Swiss financial system to prevent a similar crisis in the future. It also raises questions about the effectiveness of FINMA and the need for more powers to regulate banks. The recommendations, if implemented, could have a significant impact on the banking sector in Switzerland.