Credit Suisse may face disciplinary action, says Swiss regulator

ZURICH, March 26 (Reuters) – Swiss financial regulator FINMA said it is considering whether to take disciplinary action against Credit Suisse ( CSGN.S ) executives after Switzerland’s second-biggest bank had to be rescued last week by UBS ( UBSG.S ).

FINMA president Marlene Amstad told Swiss newspaper NZZ am Sonntag that it was “still open”[ads1]; whether new proceedings would be launched, but the regulator’s main focus was on the “transitional phase of integration” and “preserving financial stability”.

UBS agreed to buy Credit Suisse for 3 billion Swiss francs ($3.26 billion) in stock a week ago and to assume up to 5 billion francs in losses in a merger brokered by Swiss authorities amid a period of market turmoil in global banking.

Credit Suisse declined to comment on the FINMA president’s comments on Sunday when Reuters asked for a response.

Asked if FINMA was looking at holding current Credit Suisse executives responsible for the collapse of Switzerland’s second-largest bank, Amstad said they were “exploring the options”.

“CS had a cultural problem that translated into a lack of responsibility,” Amstad was quoted as saying by NZZ, adding: “Many mistakes were made over several years”.

FINMA had conducted six public “enforcement cases” against Credit Suisse in recent years, Amstad said.

“We have stepped in and used our strongest instruments,” she said of her earlier moves.

Amstad also defended Switzerland’s decision to write down 16 billion Swiss francs of Credit Suisse’s additional debt (AT1) to zero as part of the forced rescue merger.

“The AT1 instruments contractually assume that they will be fully written off in the event of a triggering event, in particular the granting of extraordinary government support,” Amstad said.

“The tapes were created precisely for such situations.”

In a separate interview with Swiss newspaper SonntagsZeitung, FINMA chief executive Urban Angehrn defended his role in handling Credit Suisse before the takeover.

“We consistently intervened in these cases, used our instruments, and they had an effect,” he said. “We don’t run the bank, that responsibility lies with the board and management of the bank.”

Angehrn also said there are open discussions about expanding FINMA’s competence, such as its ability to issue fines, which despite having “sharp instruments” it currently does not have.

“We do not have a ‘senior management regime’, which can help with the issue of management responsibility, and FINMA is limited in communicating matters.”

($1 = 0.9199 Swiss francs)

Reporting by Noele Illien; Editing by Alexander Smith

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