Zurich: The Swiss government should review what happened with Credit Suisse Group in order to glean lessons from its downfall, the International Monetary Fund said.
Authorities responded with “decisive actions” in the first intervention since 2008 to steady a globally systemically important bank, the Washington-based fund said in an annual assessment of Switzerland released on Tuesday. Even so, IMF officials added that they’d like to know more.
“We also look forward to, in time, a careful review and analysis of the case and lessons learned - both for Switzerland and internationally, the fund said.
A review should include “prolonged efforts of CS management to address long-standing risk-management failings, the Swiss supervisor’s related actions on the basis of existing enforcement provisions and potential resource needs,” and more widely, the Too Big to Fail reform agenda, officials said.
The Swiss government in Bern decided against winding down the bank, instead brokering an emergency takeover by larger domestic rival UBS Group. By favoring equity investors over the most junior holders of Credit Suisse bonds, the outcome caused ructions in financial markets.
“Authorities will also need to closely monitor the implementation of the acquisition,” the IMF said, adding that to safeguard wider stability in future, “further progress is needed to enhance financial resilience and put in place necessary instruments and resources to mitigate downside risks.”
The Swiss economy will grow 1.8 per cent in 2024 and 0.8 per cent this year, the IMF said. That’s down from 2.1 per cent in 2022 and in line with the forecast of Switzerland’s government.
The fund forecasts inflation there of 2.5 per cent this year, remaining above the Swiss National Bank’s 2 per cent ceiling until 2024. That’s similar to the central bank’s view.