Swiss parliament examines Credit score Suisse fiasco paper

© Reuters. FILE PHOTO: The logo of the Swiss bank Credit Suisse can be seen on March 24, 2021 at the headquarters in Zurich. REUTERS / Arnd Wiegmann

ZURICH (Reuters) – A Swiss parliamentary committee will discuss the effects of losses worth billions of dollars below Credit Suisse (SIX 🙂 in the midst of errors in risk management that resulted in political control of the financial sector, reported a Sunday newspaper.

"On the question of Credit Suisse it is the turn of the politicians," quoted the Sunday newspaper Prisca Birrer-Heimo, a social democratic member of the economic committee of the lower house, before the hearings scheduled for Monday and Tuesday.

Credit Suisse declined to comment on the report.

Political interventions in the private sector are unusual in Switzerland and the prospect of concrete measures remains unclear despite the crisis at the country's second largest bank.

Credit Suisse is raising capital and halting share buybacks, cutting its dividend and overhauling management after losing more than $ 5 billion to the Archegos mutual fund collapse and suspending asset management funds related to bankrupt UK supply chain finance firm Greensill.

New chairman Antonio Horta-Osorio said the extent of the bank's problems was his biggest challenge yet, and promised a thorough review of what went so badly wrong.

Birrer-Heimo said the question was "whether and how regulation of the big banks needs to be tightened", pointing to deficiencies in risk management, a bonus-driven incentive system and the size of the capital buffers banks need to hold in order to overcome crises.

Even business-friendly politicians believe it is time for the public sector to weigh up, the newspaper said.

"We don't have an existential crisis today," former MP and liberal party chairman Philipp Müller was quoted as saying, "but I was still surprised that there had been no political reactions so far."

FINMA has already initiated proceedings against Credit Suisse in connection with the Archegos and Greensill cases and has imposed additional capital requirements on the bank.

Credit Suisse announced earlier this month that it will tighten its risk-weighted assets and leverage while it continues to face regulatory scrutiny.

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