by Noel Illien, Alyssa Martinuzzi and John O’Donnell
BERNE (Reuters) – Switzerland was urged by a group of experts on Friday to properly prepare for a big bank failure in the wake of the Credit Suisse collapse, but their report to the government called for radical reform. Requirement not specified.
UBS Group emerged as Switzerland’s biggest bank earlier this year after the government hastily arranged and partially bankrolled the takeover of crisis-hit Credit Suisse to prevent the bank’s collapse.
The failure of one of the world’s biggest banks and a one-time symbol of Swiss financial might blindsided the country’s authorities and regulators, who have long grappled with the lender as it drifted from one scandal to another. Had been.
On Friday, a group of Swiss experts including bankers and academics urged the government to improve its preparedness should UBS, now much larger, fall into the crisis.
He did not call for more powers to be given to the country’s regulator FINMA with the power to impose fines. However, he added that FINMA should be given more powers to intervene and that there should be better coordination between Swiss authorities. Experts also suggested that central bank funding should be easier for banks by loosening rules on what security can be offered in return.
The acquisition of Credit Suisse – the first rescue of a global bank since the 2008 financial crisis – gave UBS enormous power, ridding it of its main rival.
This will change the landscape of banking in Switzerland, where Credit Suisse and UBS branches are spread everywhere, sometimes only a few meters apart.
The two banks, the most systemically relevant in global finance, hold combined assets of up to 140% of Swiss GDP in a country that relies heavily on finance for its economy.
During the global financial crash of 2008, it was UBS, not Credit Suisse, that needed a state rescue.
At the time, the Swiss central bank loaned more than $54 billion to a vehicle that was used by UBS to offload problematic loans, including subprime loans.
(Writing by John O’Donnell; Editing by Susan Fenton)