Credit Suisse scandal spurs changes in Swiss bank laws

Photo: AP

The series of scandals involving Credit Suisse bank and the siphoning of billions of euros from clients assets have prompted unthinkable by now amendments to the Swiss banking regulations, Reuters reported. By now the Swiss bankers were practically untouchable and their status was guaranteed by law.

The heavy losses from the collapse of family office Archegos and the disappearance of billions of client investments backed by insolvent British financier Greensill have forced regulators and triggered a rare discussion among lawmakers about fining bankers.

"Bank directors don't take responsibility for their action because there is no need to. There are no real sanctions for mismanagement," said Gerhard Andrey, a Green member of the Swiss parliament. "The scandals that have hit Credit Suisse, from Mozambique to Greensill, are damaging for Switzerland's reputation. We have proposed a reform that would mean if something goes wrong, then the manager is on the hook," he said. Andrey's proposals, which follow the ground-breaking British model that makes top management of financial firms directly accountable for their actions, are set to be discussed by Swiss lawmakers in the coming days. The debate has unfolded after Credit Suisse lost more than $5 billion from the collapse of family office Archegos and faced a barrage of legal action over $10 billion of client investments linked to Greensill.

A bank spokesman said its board of directors had launched investigations that would "reflect on the broader consequences" of those events, adding that it had made management changes in investment banking and risk controls. The Swiss rules only allow it sanction directors if directly involved in wrongdoing rather than for general managerial lapses.

Despite more than $15 billion in writedowns and penalties at Credit Suisse and multiple scandals, the Swiss bank regulator has struggled to get the bank under control and dissenting shareholders also failed to oust its chairman, Urs Rohner, before he retired this year. As well as Archegos and Greensill, Credit Suisse's has had other problems, including a spying scandal that forced the departure of its former CEO. Its bankers also faced proceedings in Britain and the United States related to loans granted to Mozambique that plunged it into a debt crisis.

US prosecutors last year said they were investigating Credit Suisse's role in the $2 billion corruption case, which stems from loans the bank helped arrange to develop Mozambique's coastal defences. The bank has said it is cooperating with the enquiry.

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