The Parliamentary Commission of Inquiry (PCI) will publish its report on Friday. The Swiss Bank Employees Association expects explanations as to why the tame supervisory authorities allowed Credit Suisse to operate for years with lower equity capital than required by regulations and why the naive Federal Council stood by and watched. Finma and the Federal Council allowed Credit Suisse’s top bankers to drive the big bank to the wall, putting thousands of jobs at risk. Even if the responsibility ultimately lies with the top managers at Credit Suisse, the failure of Finma in particular must have personnel consequences.
The Parliamentary Commission of Inquiry (PCI) will publish its eagerly awaited report on Friday. Its mandate is to “investigate the responsibilities of the authorities and bodies involved in the emergency merger of Credit Suisse with UBS”.
But let’s start by saying that Credit Suisse did not fail because the supervisory authorities – FINMA and the SNB – did not have enough effective instruments at their disposal. A year ago, the “Banking Stability” group of experts appointed by the Federal Council also dispelled the myth that Credit Suisse went under due to a force of nature – an unforeseeable bank run (see fact sheet in the supplement). Credit Suisse failed because it had taken on too much risk for years and neglected its risk management. The bank’s governing bodies and a few unscrupulous top managers bear full responsibility for this. And once again the employees are footing the bill, while the top managers, who have been showered with bonuses, remain unmolested and do not even have the decency to apologize.
Natalia Ferrara, Vice President of the Swiss Bank Employees Association, says: “As a public prosecutor, I have arrested bankers for money laundering. Driving a major bank to the wall in full awareness and putting tens of thousands of jobs at risk as well as accepting major economic consequences is not a trivial offense, it is just as criminal”.
Authorities have failed – resignation demanded
The PUK report must explain why the state supervisory authorities allowed Credit Suisse to present its own funds as better than they were for years (see fact sheet in the enclosure)? Why did the supervisory authorities and the Federal Council not force Credit Suisse to change its risky business model – if necessary with emergency legislation as on March 19, 2023?
Employees are now having to foot the bill – through the job cuts at UBS, which are now underway. And by the fact that an important player on the domestic labor market for bank employees has disappeared forever.
UBS has assured the Swiss Bank Employees Association that UBS will continue its responsible HR policy in the future and that the proven social partnership with strong employee representation at UBS and the Swiss Bank Employees Association will continue.
The Swiss Bank Employees Association welcomes these assurances from UBS and its clear commitment to Swiss values.
Supervision must become more effective
It cannot simply be business as usual. The Swiss Bank Employees Association will analyze the PUK report in detail and is calling for personnel consequences. The resignation of FINMA President Marlene Amstad is overdue. But the role of the Federal Council must also be analyzed and, if necessary, consequences must be drawn.
The Credit Suisse case must not be repeated. Additional effective instruments are therefore needed:
- Irresponsible actions by top management must not be allowed to pay off. There needs to be clear responsibilities and personal liability for the top management of banks. In addition, the Swiss Bank Employees Association proposes the examination of a separate criminal provision for the top management of banks.
- The instruments of the supervisory authorities must be adapted to the standard in the Anglo-Saxon world. It is unacceptable for supervision to remain largely toothless compared to the USA. Even the very high salaries and bonuses of top managers are always compared with the USA.
- But the most important point is implementation. We need authorities that take their responsibilities seriously, do not allow themselves to be intimidated by top managers and consistently apply the instruments available to them. People must be at the center of this; thousands of jobs are always at stake.
This is also a challenge for UBS. It must continue to show that it embodies Swiss values, assumes responsibility for the banking center and works constructively with politicians and supervisory authorities on the tightening of regulations. The callous ignoring of Finma’s interventions by those responsible at Credit Suisse must not be repeated.