Swiss Financial Regulator Pushes for Transparency: Seeks Authority to Publicly Identify Banks

Boston Brand Media brings you the latest - The Swiss financial regulator is advocating for greater transparency by seeking authorization to publicly disclose the identities of banks involved in misconduct or failing to meet regulatory requirements. This initiative aims to enhance accountability within the banking sector and ensure compliance with established standards. Stay updated on the evolving landscape of financial regulation in Switzerland as authorities push for increased transparency and accountability.

ZURICH, June 4 (Reuters) - The Swiss financial regulator, FINMA, desires the capability to publicly identify and shame banks that violate its regulations, as stated by Chief Executive Stefan Walter in an interview published by the newspaper NZZ on Tuesday.

This request forms part of FINMA's push for expanded authority, following criticism directed at the regulator for its management of Credit Suisse's downfall last year.

"Currently, disclosure of enforcement actions is rare," remarked Walter to the newspaper. "In the future, the rarity should be non-disclosure."

Walter, who assumed his position in April, emphasized that publicly disclosing punishments would serve as a deterrent for financial institutions, fostering accountability. He highlighted the importance of showcasing the effectiveness of supervision. Walter acknowledged the supervisory dilemma: failures garner widespread attention, whereas successes often go unnoticed. He urged banks to adopt greater transparency and provide comprehensive information. Failure to cooperate might prompt increased on-site inspections by the regulator.

Boston Brand Media also found that, Walter stressed the necessity of holding individuals accountable in extreme situations, including the possibility of their removal if deemed necessary. He advocated for the implementation of a senior managers regime, which would assign clear responsibility to individuals, facilitating the identification of those responsible for any misconduct.

In April, the Swiss government outlined 22 recommendations aimed at enhancing the regulation of the nation's significant financial sector. Among these suggestions were proposals for stricter capital requirements and the establishment of mechanisms to ensure individual accountability within financial institutions.

UBS, Switzerland's largest bank, which assumed a prominent role in the wake of Credit Suisse's collapse, has expressed reservations regarding proposed regulatory changes. Chairman Colm Kelleher has criticized the idea of imposing additional capital requirements, labeling it as an inappropriate solution. However, FINMA's Walter emphasized the importance of maintaining adequate capital levels to mitigate the risk and impact of potential future crises. While Walter sought to avoid conflict with UBS's management, he underscored the necessity of sufficient capitalization for financial stability.

Walter emphasized the significance of capital distribution within banks, particularly during stabilization or resolution phases, as demonstrated by the Credit Suisse crisis. He highlighted the need for adequate capital allocation within the institution, underscoring that while capital requirements escalate with size, this alone doesn't address the issue of effective capital distribution. Walter stressed the importance of ensuring that the parent company maintains a sufficient buffer to prevent it from becoming a bottleneck during a crisis.

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Source: Reuters‍