Finma Director expects more competence for the authority through politics
Published: Monday, Oct 28th 2024, 09:10
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Finma Director Stefan Walter continues to insist on more competence and more staff for the banking supervisory authority in the wake of the CS collapse. He is "counting on" parliament to approve new funds, as he said in an interview with the Tamedia newspapers (Monday edition).
For example, he is once again calling for the possibility of fining managers who are guilty and naming banks that are the subject of public proceedings. "You don't just have to look at the CS crisis, these options are simply standard abroad," Walter said in response to a question on the subject. "All the authorities I have worked for have these tools. We must be able to do everything that has a preventative effect."
Finma needs at least the authority to impose fines at the level of the banking institution, Walter demands. Fines would also have a preventative effect. "Incentives must be set in advance to encourage good behavior."
"Need more people"
Another important element for Walter is early intervention, as he confirmed in earlier statements in the interview. You have to be able to intervene at an early stage, even if everything is still supposedly calm. "When client money flows out, we are late. We have to know the risks and be able to intervene as early as possible."
This could be achieved by Finma comparing institutions with each other, including internationally, said Walter. "For example, we compare how they protect themselves against certain risks. Then we can quickly see who is falling behind in the field. We then tell the banks concerned and demand that they improve and catch up with the other institutions."
Although it is still too early for exact figures, Finma also needs more people. At present, cooperation with auditors is an important element. "They carry out inspections at banks for us, when it would be central to Finma's work to carry out on-site inspections itself."
Less dependence on auditors
However, the supervisory authority must be able to decide for itself when it wants to carry out an on-site inspection, the Finma boss demands. Because: "Our own employees must also know the banks very well and not rely too much on the auditors' reports."
Following the CS crisis, the Federal Council examined the regulation of systemically important banks and published a "too big to fail" report in April. In order to reduce the risk to banking stability, it proposes various measures, including additional equity capital. The results of the Parliamentary Commission of Inquiry (PUK) into the emergency merger of CS with UBS are still outstanding and should also be included in the implementation.
However, the longer it takes for Credit Suisse to come to an end, the stronger the resistance from the industry becomes: the Swiss Bankers Association (SBA) is criticizing a number of the measures proposed by the Federal Council. Last Thursday, the industry association was particularly cautious about stricter regulations for banks' own funds. It also rejects additional powers for FINMA.
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