(Bloomberg) -- The head of Switzerland’s financial watchdog is seeking powers to conduct preemptive on-site checks to investigate records of banks and non-banks, the latest move to help strengthen the agency.
While the regulator, known as Finma, currently has to mandate external auditors for certain tasks, the ability of the authority to do such checks on its own should be enshrined in law to ensure effective early intervention, Chief Executive Officer Stefan Walter said on Tuesday while addressing finance professionals in Zurich. This should apply to regular lenders as well as fintechs, he added.
“Especially where risks arise from new business models and technology that can’t yet be easily assessed, we believe close monitoring by Finma is helpful for the good reputation of the entire industry,” he said. “Innovation and supervision don’t contradict each other!”
While Walter had previously warned of risk building up in the non-bank financial sector, his remarks can be seen as directed at Switzerland’s traditional banks as well. He has repeated the mantra of strengthening early intervention several times since becoming executive head of Finma earlier this year, particularly in connection with behemoth lender UBS Group AG.
In Tuesday’s speech, he laid out that the regulator needs to be able to perform an on-site check and draw its own sample of loans or clients at a financial institution to ensure that haircuts are conservative enough or anti-money-laundering controls are sufficient.
Also, non-quantitative measures should be taken into account in supervision, Walter added, echoing earlier remarks.
“Usually problems of banks and other financial institutions begin precisely there — with weaknesses in risk culture, governance and business models,” he said.
Walter’s latest comments add to the past ones showing how he wants to toughen up Swiss banking supervision after last year’s Credit Suisse crisis exposed significant weaknesses in the system.
The government has made proposals in response to the first collapse since 2008 of a global systemically important bank — including higher capital requirements for UBS that acquired its Swiss rival. But the raft of new measures will only be finalized over the next couple of years.
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