Zurich, Switzerland – The Swiss government has promised lawmakers a full report into the factors that lay behind the downfall of Credit Suisse, one of the world’s biggest banks, parliament said Thursday.
The emergency takeover by UBS has sparked unease and criticism within Switzerland, where Credit Suisse was a pillar of the country’s totemic banking sector.
Lawmakers want to ensure such a situation could never happen again.
Following a string of scandals, the collapse of three US regional banks in March left Credit Suisse looking shaky amid fears of contagion and shares nosedived.
Fearing a collapse that could have triggered a global banking crisis, a takeover was hastily arranged on March 19.
The government, the central bank and the financial regulators FINMA strongarmed UBS into the merger, before the markets reopened.
The country’s biggest bank will complete the takeover of the second largest in the coming months.
The economy committee of the National Council, the lower house of parliament, asked the government for an analysis of the determining factors behind the decline of Credit Suisse.
In a statement, the scrutiny body said it was “particularly interested in the triggers of this crisis, in the solution adopted and the risks it involves, in the other solutions that would have been possible”, in FINMA’s monitoring of Credit Suisse “and the need for legislation.
“This last point is beyond doubt for the committee”.
It wants the report to cover the roles played by rising interest rates; the type of credit the bank was issuing; speculative trading in derivatives; trading algorithms and high-frequency trading; ratings agencies; auditors; and risks arising from the bank’s product structure.
The government accepted the request, parliamentary documents published Thursday showed, pledging to submit its conclusions within a year as part of its next report on systemically important banks.
The events leading to the takeover and the national-level measures taken, as well as the legislation on “too big to fail” banks “must be subject to in-depth examination,” the government said.
“The review will integrate external expertize.”
Like UBS, Credit Suisse was one of 30 worldwide Global Systemically Important Banks — deemed of such importance to the international banking system that they are considered too big to fail.
The National Council is to hold a three-day extraordinary session from next Tuesday devoted to the banking crisis.