Shares of Credit Suisse Group AG (NYSE: CS) drops in pre trading session on Monday as the Switzerland’s second-largest bank had to be saved by UBS last week, the Swiss financial regulator FINMA said it was debating whether to impose sanctions on Credit Suisse managers.
Marlene Amstad, president of FINMA, told the Swiss daily NZZ am Sonntag that the regulator’s primary concerns were “the transitional phase of integration” and “maintaining financial stability,” adding that it was “still open” if fresh procedures will be initiated.
In a merger that was facilitated by Swiss regulators during a moment of market unrest in the global banking industry, UBS agreed to acquire Credit Suisse for 3 billion Swiss francs ($3.26 billion) in shares and to take on up to 5 billion francs in losses a week ago.
When prompted by Reuters, Credit Suisse on Sunday declined to respond to the FINMA President’s remarks.
Amstad responded that FINMA is “exploring the alternatives” when asked if it is considering holding current Credit Suisse managers liable for the failure of Switzerland’s second-largest bank.
According to Amstad, “CS had a cultural issue that manifested into a lack of accountability,” adding, “Numerous mistakes were committed over a number of years.”
According to Amstad, FINMA has recently engaged in six public “enforcement processes” against Credit Suisse. She referred to its prior actions as “intervening and using our greatest tools.”
Amstad also supported Switzerland’s choice to eliminate Credit Suisse Additional Tier 1 (AT1) debt of 16 billion Swiss francs as part of the forced rescue merger.
In the case of a trigger event, namely the provision of extraordinary government support, “the AT1 instruments contractually specify that they would be totally written off,” Amstad added.
“The bonds were designed specifically for such circumstances.”
CEO Urban Angehrn of FINMA defended the organization’s conduct in interacting with Credit Suisse before the takeover in a separate interview with the Swiss daily SonntagsZeitung.