The demise of Credit Suisse was down to corporate mismanagement, but other authorities should have been wiser to the danger, a parliamentary inquiry has concluded. Will UBS, which swallowed up its ailing counterpart, now be kept on a tighter leash?
In mid-March 2023, the financial world was eyeing Switzerland nervously. Despite an emergency loan from the Swiss National Bank (SNB), large bank Credit Suisse (CS) was on the brink of collapse as money ran out. The state-enforced merger of CS and UBS – put in place in extremis by Finance Minister Karin Keller-Sutter, the Swiss Financial Market Supervisory Authority (FINMA), and the SNB – helped to prevent a global financial crisis, the Parliamentary Investigation Committee (PInC) noted in its report, which was published at the end of 2024.
The 14-strong committee presided over by the Fribourg Centre Party member of the Council of States, Isabelle Chassot, describes at length how the authorities responded to the bank’s predicament, which became more acute in autumn 2022. The authorities considered different solutions, such as a corporate restructuring, bankruptcy, and temporary nationalisation. They chose their favoured option, UBS’s takeover of CS, when the situation escalated in spring 2023 – the federal government pledging billions of Swiss francs as a backstop. This was a broadly appropriate solution, says the PInC, notwithstanding the risk that it posed for the taxpayer.
The PInC is unequivocal in its view that the near collapse of a once solid bank was down to years of mismanagement on the part of the CS Board of Directors and the CS Executive Board. Its report details how CS officials tried to extract concessions until the very last minute – like “poker players”. However, the PInC’s remit was to scrutinise the response at federal level, not the failings of CS. Its report is kinder on some parties than others.
More could have been done earlier in terms of diagnosis and prevention, says the PInC. The Federal Council and parliament introduced the “too big to fail” regime after the bailout of UBS in 2008 but were too hesitant in implementing and improving it. When CS found itself in crisis, the finance minister at the time, Ueli Maurer, failed to adequately inform the Federal Council of the situation. He also cancelled an emergency meeting at short notice. Then he failed to provide his successor Keller-Sutter with a written dossier at the end of 2022. Maurer rejected these allegations in early 2025. He said he had wanted to prevent leaks that would have further endangered the bank.
FINMA had demanded improvements, castigating CS several times from 2015. But it was unable to assert its authority, explained the PInC. Banking misdemeanours remained unpunished despite ongoing investigations. In 2017, FINMA granted the CS a “regulatory filter”, which allowed the bank to ease its capital requirements and maintain the illusion of holding more capital than it did. The SNB had advised against FINMA taking this step.
What lessons will politicians learn from the report with a view to minimising risk and protecting the taxpayer from similar fiascos in future? The PInC wants FINMA to have an improved range of sanctions at its disposal, for example. In general, it advocates placing “greater emphasis” on financial stability while taking the “significant size” of UBS post-merger into account. The question is whether the only systemically relevant global bank remaining in Switzerland should be subject to stricter capital requirements that would allow it to compensate for any losses it makes abroad. Opinion is divided.
The centre-left parties are in favour of restricting Switzerland’s new “monster bank” in this way, while those further on the right warn that UBS may relocate to another country as a result. UBS boss Sergio Ermotti has spoken out against the bank holding more capital, with the media portraying this as a battle between him and Keller-Sutter. How far the Federal Council is prepared to go should become clear by early summer. Parliament was due to debate the PInC report in March. After two dramatic bailouts in 15 years, Switzerland is arguing again about how it regulates its banks.
Link to the PInC report: www.revue.link/cspuk
The emergency merger of CS and UBS averted an international financial crisis.
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