Finma to Overhaul Governance Supervision

In a speech at the Bundesbank Symposium last month, Stefan Walter, CEO of the Swiss Financial Market Supervisory Authority (Finma), announced the agency's plans to overhaul Switzerland's principles-based regulatory regime in favor of stricter supervision.

Walter argued that almost every crisis in banking has stemmed from weak risk culture, poor governance, and faulty business models. "That is why supervisors have to be able to act early in those areas, or before those weaknesses manifest as losses, weaker capitalization, and liquidity," he said. Finma may look to institute such an early intervention framework that would be based upon indicators of risk governance weaknesses, Walter said. That process could include competence reviews of board members, and a system of checks and balances for overly-dominant CEOs.