Swiss financial market regulator FINMA has ordered an audit into Credit Suisse’s handling of events leading to its acquisition by UBS in 2023. The audit will focus on the 15 months prior to the merger, with close to a dozen current or former employees of the two banks being interviewed. FINMA commissioned law firm Wenger Plattner to conduct the audit, following a “secret” order issued in September 2023 to review how Credit Suisse managed the crisis. The interviews will determine if authorities were misled by Credit Suisse’s management at the time.
The investigation by FINMA encompasses questions about the state of Credit Suisse’s liquidity, equity, and general management leading up to the merger with UBS. In a report released in December, FINMA highlighted Credit Suisse’s close call with collapse months before the takeover and advocated for stronger oversight powers to regulate banks. A Swiss parliamentary committee is also investigating how authorities handled the Credit Suisse demise and is expected to release its report later this year.
In April, Swiss authorities announced a package of measures, including stricter capital requirements for UBS, to prevent a similar crisis to the one at Credit Suisse. Parliament will debate these proposals following the release of the parliamentary report. Critics of the Credit Suisse takeover argue that authorities could have kept the bank as a separate entity but were slow to act and provide assurance of its survival. However, authorities have defended their actions, attributing the collapse to failures within Credit Suisse.
The audit ordered by FINMA into Credit Suisse’s handling of events leading to its 2023 acquisition by UBS is part of an investigation to determine the management’s role in the crisis. The audit will focus on the 15 months preceding the merger and involves interviews with current and former employees of both banks. The investigation also looks into issues such as Credit Suisse’s liquidity, equity, and management practices during the lead-up to the acquisition.
In response to the findings of the investigation, Swiss authorities have proposed stricter regulations, including increased capital requirements for banks, aimed at preventing a repeat of the Credit Suisse meltdown. The parliamentary committee investigating the Credit Suisse demise is expected to release its report soon, which will inform the debate in parliament over the proposed measures. Critics argue that authorities could have taken different actions to prevent the collapse of Credit Suisse but have defended their decisions and point to internal failures at the bank.
Overall, the audit into Credit Suisse’s crisis management is part of a larger effort to ensure the stability of the Swiss financial sector and the sound management of banks in the country. The investigation will shed light on the events leading to the acquisition of Credit Suisse by UBS, with the goal of identifying any misconduct or mismanagement that may have contributed to the crisis. The outcome of the audit and subsequent measures taken by Swiss authorities will be crucial in shaping the future regulatory framework for banks in Switzerland.
