New Finma Director faces numerous challenges
Published: Wednesday, Jan 24th 2024, 15:40
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After a long search process, the Financial Market Authority Finma has found a new director in Stefan Walter from the ECB. A number of challenges now await the new man from Germany at the head of the supervisory authority.
Finma is primarily in the spotlight in connection with the regulation of UBS, the only remaining major bank following the demise of CS. The public's expectations of the authority and the new director are clear: Finma must do everything in its power to prevent any potential difficulties at the new "superbank" - often referred to as a "monster bank" to the displeasure of UBS managers.
New instruments
The Finma managers have already repeatedly called for more powers and new instruments to support their tasks. These include, in particular, the authority to impose fines, which other supervisory authorities have long been familiar with. However, the demand for clear responsibilities for bank managers ("senior management regime") is also one of the core demands.
More transparency vis-à-vis the public could also help the Finma managers to be more effective. For example, FINMA is generally prohibited from providing information about its enforcement proceedings. It is also not allowed to publicly communicate bans on bankers, which the authority repeatedly issues.
Involving the banking sector
It remains to be seen for the new Finma management whether the banking sector has reconsidered its previous defensive stance against strengthening the often little-loved supervisors. In recent months, the Swiss Bankers Association (SBA) has been very cautious on these issues. It was "open to a discussion", the industry association merely announced in December.
Parliament will ultimately decide on this: according to announcements by Finance Minister Karin Keller-Sutter, the Federal Council intends to submit proposals to parliament in the spring that also include strengthening the Finma. In December, however, the Council of States rejected a motion by its Committee for Economic Affairs and Taxation (WAK-S) for stricter Finma instruments. The majority declared that it did not want to pre-empt ongoing work in connection with the CS crisis.
Cooperation with the Board of Directors
In addition to the political discussions about Finma's role and competencies, the new director will probably also have to find a way to work together with the Finma Board of Directors under the leadership of Chairwoman Marlene Amstad. Since the departure of Finma Director Urban Angehrn in September 2023, the media and other executives at the supervisory authority have written several times about Amstad's apparently very demanding tone with her employees.
The supervisory body under Amstad has also apparently reserved the last word on Finma decisions far more often than under her predecessor Thomas Bauer. The Chairwoman herself explained this with the "extraordinary times" of the CS crisis. She clearly rejected criticism of her management style from "anonymous sources": "No one on the Board of Directors or the Executive Board would sign off on this."
Necessary profile
With his many years of experience on banking committees, the new Finma Director certainly has the necessary profile and independence for his new tasks: Walter not only built up the supervision of systemically important banks at the European Central Bank (ECB) and headed this for many years. As former Secretary General of the Basel Committee on Banking Supervision, he also has experience of financial crises. All in all, these are good prerequisites for a dialog with representatives of both small and large banks on an equal footing.
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