Last week, the Swiss government proposed a wide-ranging package of reforms to the country's too-big-to-fail regime. The reforms follow the near-collapse of Credit Suisse and its emergency acquisition by UBS Group AG, which raised concerns about the stability of Switzerland's financial sector.
Through these changes, the government aims to empower the Swiss Financial Market Supervisory Authority (Finma) to compel banks to resolve supervisory findings more effectively. The proposals include the introduction of a Senior Managers Regime, bonus clawback provisions, improved information-gathering capabilities, and strengthened legal grounds for management changes. However, the government stopped short of granting Finma the ability to levy fines on banks.
While Finance Minister Karin Keller-Sutter and others had advocated for empowering Finma with fine-imposing capabilities, the government's proposal for banking reform merely suggests examining the possibility. While fines are a standard tool for other regulators in large financial centers, further study is needed to avoid weakening banks' willingness to cooperate, according to the report.
In addition to the previous reforms, the government will explore extending personal penalties for misconduct to smaller banks. Finma will also receive increased staffing and resources.
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