Global Banking Watchdog Downplays Need for Change After Credit Suisse Debacle

Logos of Swiss banks Credit Suisse and UBS are seen before a news conference in Zurich, Switzerland, on August 30, 2023.

LONDON, Oct 10 (Reuters) – A global oversight body for banking has minimized the urgency of rescuing Credit Suisse, stating that there is no need for an overhaul of international rules drafted after the global financial crisis 15 years ago to prevent such a disaster.

The Financial Stability Board, an influential group of central bankers, regulators, and officials from the world’s top economic powers, released a report on “lessons to be learned” on Tuesday, concluding that the framework has been successful.

In particular, it examined why Swiss authorities had opted to support a takeover by a larger rival, UBS, instead of winding up the bank under a “resolution” mechanism designed after the 2008 global financial crisis.

The officials summarized that the “resolution” rules for closing a collapsing bank without causing market panic could have been effective for Credit Suisse, although public funding would likely still have been necessary.

“This review concludes that recent events demonstrate the soundness of the international resolution framework in providing Swiss authorities with an executable alternative to the solution they deemed preferable,” the FSB said.

Only improvements in how the rules are applied may be necessary, rather than changes to their substance, it said.

The report contrasts with a barrage of criticism earlier this year when UBS Group (UBSG.S) emerged as Switzerland’s single largest bank after the government hastily arranged and partly financed its takeover of the troubled Credit Suisse.