(Bloomberg) -- Switzerland is strengthening financial regulation following the collapse last year of Credit Suisse, with the latest impulse being a comprehensive inquiry by the parliament.
Lawmakers published their report on Friday, with more than 30 separate proposals which can feed into new legislation in combination with the government’s own roadmap which was published in April.
Here is a selection of the findings:
- The parliamentary commission — known by its acronym PUK — backed giving the regulator Finma the power to fine banks and individuals, going further than previous government proposals that envisioned fines only for lenders. Finma is one of the few major regulators globally not able to hand out punitive fines, and can only confiscate profits deemed to have been illegally acquired.
- UBS Group AG is Switzerland’s last lender that qualifies as a global Systemically Important Bank and can as such generally expect a tougher government stance in future debates on financial regulation. The PUK demanded from the government to give more weight to the interests of financial stability and the overall economy.
- The commission would like to give Finma the ability to communicate publicly about individual enforcement proceedings against systemically-important banks.
- It also wants the government to check that the banks are sufficiently capitalized, and supported higher capital backing of systemic banks’ foreign subsidiaries. This aligns with the government’s own plan, announced in April.
- The government should, together with its international partners, find ways to effectively respond to digital bank runs.
- If the government follows the PUK’s recommendation, Finma will soon be the sole audit supervisor of systemically relevant banks. It currently shares the task with another Swiss authority, which led to confusion on responsibilities in regard to Credit Suisse.
- The commission wants to make it more difficult for the systemically important banks to get relief from capital and liquidity requirements. If given, they have to be transparently disclosed and pegged to a binding time limit.
- Next to fining, Finma could also get more tools for early intervention and be able to order banks to have a capital plan. The commission also wants the government to identify other measures which would allow Finma to “meet major banks at eye level.”
- Bankers’ bonuses at big banks could soon be getting more attention in Switzerland. The commission wants the government to prevent bonuses at SIBs if they don’t make profits. More generally, “false incentives” through bonuses should be avoided in the future.
- The PUK wants the government to rethink existing criteria for the authorization of bank top management. One idea presented includes a minimum residency in Switzerland of ten years for the majority of the board of directors.
©2024 Bloomberg L.P.