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Credit Suisse’s top execs could face a probe over their role in the banking giant’s collapse, Swiss watchdog says

Credit SuisseCredit Suisse managers could be probed over their role in the bank’s recent collapse, according to the president of Swiss regulator FINMA.

Arnd Wiegmann/Reuters

  • Credit Suisse execs could face a probe and disciplinary action, the head of its Swiss regulator has said.
  • “We’re not a criminal authority, but we are looking into the relevant possibilities,” FINMA’s Marlene Amstad said.
  • The 167-year-old Swiss banking giant was rescued by its rival UBS in a deal orchestrated by authorities.

Credit Suisse executives could be probed and disciplined over how they ran the bank in the run-up to its collapse and subsequent rescue by rival UBS, according to the president of Switzerland’s financial regulator.

“We are not a criminal authority, but we are looking into the relevant possibilities,” Marlene Amstad told local newspaper NZZ am Sonntag, when asked whether FINMA would hold Credit Suisse managers to account for the failure.

Amstad’s comments came one week after FINMA and the Swiss government brokered a deal for UBS to take over the 167-year-old Swiss bank for 3 billion francs ($3.3 billion).

Credit Suisse’s Zurich-listed shares plummeted 93% between the start of 2021 and last Sunday and currently trade at UBS’s agreed takeover price of 0.76 francs ($0.83).

The Swiss banking giant was implicated in several high-profile scandals over that period. It took massive losses from the collapse of its clients Archegos Capital Management and Greensill Capital in 2021, and it was fined $2 million for laundering cocaine cash for Bulgarian criminals last year.

“CS had a cultural problem that translated into a lack of accountability,” Amstad said in the NZZ am Sonntag interview published Sunday. “Often it was not clear who was responsible for what.”

“This favored a negligent handling of risks,” she added.

FINMA’s president defended the regulator’s high-profile decision to mark down the value of Credit Suisse’s Additional Tier 1 bonds to zero in the aftermath of the bank’s collapse.

AT1s are hybrid bonds that a bank can convert into shares if its financial health falls below a certain level. FINMA said last week it would write the value of Credit Suisse’s AT1s down to zero, effectively wiping out assets worth 16 trillion Swiss francs ($17 billion) overnight. 

That sparked outrage among bondholders, some of whom say they are now considering legal action against the financial watchdog. But Amstad pointed out that the fine print in the bonds’ contracts had granted FINMA the power to wipe them out in extraordinary circumstances.

“The AT1 instruments contractually provide that they will be fully written off in the case of a trigger event, in particular the granting of extraordinary government support,” she said.

“The instruments were created precisely for such situations,” Amstad added.

Read more: Credit Suisse rescue: The biggest winners and losers from UBS’s historic deal

Read the original article on Business Insider
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