Swiss watchdog to probe Credit Suisse, UBS takeover

163
2
Swiss watchdog to probe Credit Suisse, UBS takeover

Switzerland's Financial Market Supervisory Authority FINMA will investigate the Credit Suisse Group AG CS bank and possibly take disciplinary action against the financial services firm.

The FINMA will look at how top managers ran the Credit Suisse bank in the lead-up to its collapse and takeover by UBS Group AG UBS, reports Bloomberg.

Credit Suisse had a cultural problem that resulted in a lack of accountability, said Marlene Amstad, FINMA President, at the Sunday newspaper NZZ. It was often not clear who was responsible for what. This favors negligent handling of risks. Amstad said it is exploring the options when asked whether FINMA is considering holding current Credit Suisse managers accountable for the collapse of Switzerland's second largest bank. CS had a cultural problem that translated into a lack of responsibilities, Amstad said, adding that numerous mistakes were made over the past several years. UBS Group UBS agreed last week to pay $3.25 billion in stock to acquire Credit Suisse. UBS said the two's merger would create a business with more than $5 trillion in total invested assets and sustainable value opportunities.

Read Also: UBS acquisition of Credit Suisse: Bye Bye AT 1 Investors, Anxiety builds Among Banks' subordinated bondholders

The combined business is expected to generate an annual run-rate of more than $8 billion by the year 2027.

The deal is expected to accrue earnings per share by the year 2027, according to UBS. It said it remains well above its target of 13%.

After the bank's acquisition, questions have been raised about FINMA's role and whether the regulatory body should have prevented Credit Suisse's collapse.

We intervened very aggressively, and very heavily, when there were breaches of supervisory law. According to NZZ, Amstad said in defense that when we act harshly, it usually doesn't become public.

Imagine if it had become known that CS had already worked on CS's restructuring order in November or that we had asked CS to prepare alternative solutions for the case that had just occurred, she added.

FINMA CEO Urban Angehrn said in an interview with the German publication SonntagsZeitung that FINMA does not have a senior managers' regime that would allow the watchdog to identify responsibility and place blame, which means that there are no more excuses. We've had a lot of an effect over the years. Angehrn said that we pushed the limits of our mission. The federal councilor said that you can't regulate a crisis of confidence.