Swiss Finance Minister Karin Keller-Sutter said that the purchase of Credit Suisse by the UBS Group was a less risky step, noting the need for the government of this country to take measures capable of providing a high level of protection to taxpayers in the event of a crisis in the banking sector.
During her conversation with media representatives, the minister stated the need to act towards the development and implementation of a system of norms that will allow citizens to safely survive the turmoil in the financial industry. She noted that there is no alternative to this decision.
Karin Keller-Sutter also stated that it is necessary to create a system of guarantees that in the event of bankruptcy of a large financial institution there will be no large-scale ripple effect, which means that the whole country will not follow the bank into the economic abyss. She stressed that the general financial crisis at the state level, provoked by the collapse of the lender, is the worst-case scenario.
The minister did not provide any comments in response to a question from journalists about which new proposals will be submitted to parliament in the spring. At the same time, Karin Keller-Sutter said that the discussion of unpleasant issues will take place.
The minister also noted during her communication with media representatives that billions of francs of liquidity guaranteed by the Swiss government as part of the rescue efforts of Credit Suisse could be at significant risk if a decision was made to liquidate the financial institution.
Separately, she stated that in the fundamental understanding of the need for new rules, there are no constituent semantic elements caused by hostility towards banks of systemic importance. The minister noted that in this case, the main guideline is responsibility for the state of the Swiss economic system.
The financial watchdog of the mentioned country, Finma, said last week that it needs more powers to improve monitoring of banks to prevent crisis situations like the one in which Credit Suisse found itself this year.
The regulator strives to gain access to more effective law enforcement tools, including fines, the opportunity to intervene in bonus decisions and punish senior managers for errors, and disclose its proceedings regularly.
At a press conference last week, Finma President Marlene Amstad said that Switzerland’s success as a financial center largely depends on how the powers of the organization she heads will be reformed.
The collapse of Credit Suisse in March raised the issue of the scope of the regulator’s capabilities. In the context of this situation, according to some experts, the watchdog demonstrated a lack of powers and resources possessed by organizations of similar functional purpose in other countries, including the ability to use punitive monetary measures for offenses.
Finma last week also called for a stronger legal framework for itself and stricter rules on corporate governance. The regulator is exploring the possibility of changing the rules that relate to individual capital requirements for banks. Representatives of the organization said that this decision will allow Swiss financial institutions to better match their global competitors.
As we have reported earlier, UBS Reports Loss on Costs of Credit Suisse Takeover.
