IMF urges Swiss to strengthen bank resilience

The mega-merger of Switzerland's 2 biggest banks was a analyzable operation. Photo: Fabrice COFFRINI / AFP/File
Source: AFP

The International Monetary Fund connected Tuesday urged Switzerland to fortify the resilience of its banks and code the flaws exposed by the illness of Credit Suisse.

The IMF said the Swiss Financial Market Supervisory Authority (FINMA) ought to beryllium capable to intervene aboriginal to observe and code slope failures, including having the powerfulness to enforce fines, behaviour on-site inspections, oregon intervene to amended hazard management.

"Enhanced ineligible powers and resources for FINMA are captious to strengthening the effectiveness of supervision," the IMF said arsenic it presented the findings of an investigation of the Swiss fiscal sector.

Credit Suisse, Switzerland's second-biggest bank, was among 30 planetary banks deemed excessively large to neglect owed to their value successful the planetary banking architecture.

But it imploded successful March 2023, with the Swiss government, the cardinal slope and FINMA strongarming the country's biggest slope UBS into a quickfire $3.25-billion takeover.

The authorities feared Credit Suisse would person rapidly defaulted and triggered a planetary banking situation that would besides person shredded Switzerland's invaluable estimation for dependable banking.

The authorities acceptable astir tightening regulations successful the banking assemblage -- successful peculiar to guarantee that UBS tin withstand a crisis, fixed the size of the megabank now, successful narration to the Swiss economy.

Credit Suisse was the second-biggest slope successful Switzerland. Photo: Fabrice COFFRINI / AFP/File
Source: AFP

Last period it unveiled its proposals, which included strengthening FINMA's powers and importantly expanding the superior that UBS volition person to acceptable speech for its overseas subsidiaries -- overmuch to the bank's displeasure.

This could magnitude to astir $18 cardinal of further capital.

However, UBS argued that these requirements -- which are overmuch much onerous than those successful different countries -- risked putting it astatine a disadvantage compared to its competitors abroad.

The reforms, aimed astatine reducing the risks for the state, taxpayers and the economy, "would further fortify the semipermanent stableness of the Swiss fiscal centre", the IMF said.

The IMF recovered the Swiss fiscal assemblage would beryllium broadly resilient successful the lawsuit of a terrible shock, but nevertheless needed strengthening fixed the existent clime of precocious uncertainty successful the planetary economy.

"Switzerland continues to payment from beardown fundamentals, highly credible institutions, and a skilled labour force, positioning it among the world’s astir competitive, resilient, and innovative economies," the IMF said successful a statement.

Nonetheless, it faces challenges from "persistent safe-haven pressures" and the appreciation of the Swiss franc currency, it said.

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Source: AFP