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Credit Suisse: Swiss regulator studies how management can be held accountable

According to Marlene Amstard, president of Finma, Crédit Suisse failed in particular due to poor decisions made by management which “for a long time clung to a strategy that involved high risks” without being able to “manage these risks properly”.

Finma, the Swiss financial sector regulator, is studying the possibilities of holding Credit Suisse leaders to account after the bank’s debacle, its president told Swiss press. “We are not a criminal authority, but we are exploring the corresponding possibilities,” said Marlene Amstad, in an interview published by the Sunday newspaper NZZ am Sonntag. The quick bailout of Credit Suisse by rival UBS under pressure from government and regulatory authorities shocked the country.

Many observers also fear that the size of UBS is now blown out of proportion. According to Marlene Amstad, its capital and liquidity requirements should gradually increase. This takeover bid follows the turmoil experienced by banks in the United States, which led investors to sell securities of institutions considered weak links, such as Credit Suisse, which had been multiplying scandals for two years.

“A largely insufficient risk culture”

Axel Lehmann, the chairman of Credit Suisse, also accused social media of helping to bring down the bank. According to Marlene Amstad, “The social media storm is obviously not the cause of Credit Suisse’s problems.” “These have a long history. They were caused by various scandals and management mistakes in recent years. The bank was already in a reputational and trust crisis,” she notes.

He also notes that Credit Suisse’s problems were not confined to a single business sector and “reflected a largely insufficient risk culture.” He acknowledges that the bank has a very large number of employees who were doing their job well and that the sectors of activity were working. “In the end, it failed due to the many scandals and bad decisions made by the management. The bank’s management clung to a strategy that carried high risks for a long time, but they were unable to manage these risks properly. This problem has persisted for a long time. several years”, analyzes the president of Finma.

The state and regulators have been accused by some observers of taking too long to act. What Marlene Amstad denies, stressing that Finma’s interventions are not always made public. And she, she points out, “poor corporate culture and strategic misjudgments on the part of management cannot ultimately be completely eliminated through strict regulation.”

Author: TT with AFP
Source: BFM TV

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