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UBS chief executive Sergio Ermotti has called for greater powers for Switzerland’s financial regulator and sanctions for negligent bankers in the wake of Credit Suisse’s collapse.
In a rare show of support from a senior banker for tougher regulations, the head of UBS — which rescued its former rival in March in the most significant bank takeover since the financial crisis — said Switzerland should increase personal accountability in its banking sector.
“It should be easier for the bank, or the regulator, to go after people who demonstrated great negligence in their duties,” said Ermotti in a speech at the University of Zurich on Wednesday night.
He added that while there was no need to change Switzerland’s regulatory framework fundamentally, there was merit in targeted alterations to “address the root causes of the Credit Suisse collapse”.
These include strengthening “the tools for early intervention by supervisors based on an objective set of indicators while also relying on a strong legal basis for such actions”, Ermotti said.
The UBS chief was endorsing a package of reforms to Switzerland’s banking rules presented by a government-appointed panel of financial experts in September.
Among the main findings of the group, which was tasked with analysing the near-collapse of Credit Suisse, was that the country’s markets regulator Finma was too weak to handle banking crises adequately.
In the first official, public analysis of the crisis, it found that Finma lacked teeth compared with international peers and struggled to enforce its will on the country’s banking sector.
The long-running problems at Credit Suisse came to a head in March, when a collapse in the bank’s share price and exodus of client assets prompted Swiss authorities to call on UBS to rescue its neighbour.
The fall of Credit Suisse — a 167-year-old institution that financed Switzerland’s industrial revolution — led to recriminations within the country, with a parliamentary inquiry into the collapse under way.
The bank’s demise followed more than a decade of scandals and losses, which Ermotti characterised on Wednesday as a “slow, painful decline — and dramatic finish” that was “embarrassing to the Swiss financial centre and to the image of Switzerland in general”.
In an appraisal of the failings at Credit Suisse and the responsibility of its management team and board during the bank’s final years, Ermotti said: “Many key stakeholders neglected the warning signs — or worse, ignored them.”
He added: “[Credit Suisse] had repeated risk management and operational failures which undermined the credibility of its leadership and the board.
“This ineffective governance in turn led to excessive turnover in key board and management positions, further undermining individual accountability across the firm.”
