The annual industry get-together hosted by the Swiss Bankers Association (SBA) was supposed to be all about cyber risks. Yet the takeover of Credit Suisse was also a hotly debated topic at its «Bankers Day.»
Although the topic of cyber security was on the agenda for yesterday's traditional Bankers Day of the Swiss Bankers Association (SBA), the consequences of the Credit Suisse takeover were an ongoing topic of discussion.
At the event, Marcel Rohner, Chairman of the SBA, placed trust in the financial center at the center of his speech, saying trust in a financial center arose at three levels: «the country, the financial system and the individual bank.» The influx of foreign capital and the permanently lower real interest rates underline the unbroken confidence in Switzerland, he said.
Finma Resources
The second level of confidence, the financial system, is based on the strength and international competitiveness of its institutional structure and an independent national bank and financial market supervisory authority. Rohner argued in favor of strengthening the supervision's authority, should the ongoing investigation into the events surrounding Credit Suisse prove that additional actions of the Swiss Financial Market Supervisory Authority (Finma) could have prevented the crisis.
This is also in line with the demands recently presented by the expert group on banking stability set up by the Federal Council.
Bank Run
Furthermore, Rohner said monetary policy needed to adapt to the increased speed of bank runs, adding that it had reached completely new dimensions.
«It is extremely important that liquidity management is adapted to the new circumstances. In order to achieve the goal of increased stability, we then need the further step of de-stigmatizing liquidity support,» he said.
Expert Group
Rohner backs the Expert Group on Banking Stability's proposal to merge the provision of additional liquidity with the normal set of monetary policy instruments. «This would be a second safety net behind deposit insurance and would be financed from banks' assets. This would apply to all banks and thus substantially increase systemic stability overall.»
In a message to parliament in early September, the Federal Council called for the public liquidity backstop (PLB) used in the Credit Suisse rescue operation to be converted into ordinary law. All systemically important big banks - UBS, Raiffeisen, Postfinance, Zuercher Kantonalbank - would then be able to benefit from state-backed funds in an emergency without having to deposit collateral themselves.
«Zero Tolerance»
This new type of state guarantee is generally welcome among bankers, while a significantly more expensive increase in equity capital is widely rejected.
Lastly, Rohner also spoke to his audience's conscience.:«Enforcing and strictly adhering to limits and rules for all risk categories is the indispensable core of a credible risk culture. There is no alternative to zero tolerance in banking when it comes to enforcing limits and rules,» he said.
