ZURICH, Sept 30 (Askume) – Swiss National Bank’s new President Martin Schlegel will take over this week as the central bank deals with the Credit Suisse crisis and UBS Group AG UBSG.S .
Schlegel, who currently serves as vice president of the Swiss National Bank and has long been a close ally of SNB President Thomas Jordan, will on Tuesday launch a parliamentary inquiry into how Swiss authorities handled the collapse of Credit Suisse , details of which are expected to be released in the coming weeks.
A Swiss media report in July suggested that a secret committee of lawmakers appointed to investigate would criticise the way the finance ministry, financial market regulator FINMA and the Swiss National Bank handled the events that ultimately led to the collapse of the country’s second-largest bank.
“Swiss authorities were completely unprepared to halt or prevent the company from collapsing,” Paul Tucker, a former Bank of England deputy governor, wrote in a report to the Swiss Treasury in late 2023.
Following multiple financial failures at Credit Suisse and months of massive withdrawals , the Swiss government, the SNB, and the country’s regulators stepped in to help the 167-year-old institution merge with UBS in March 2023.
Some Swiss economists and business leaders say the SNB has proven inadequate, reacting too slowly to the emerging crisis, taking too hard a stance on providing emergency funding and simply hoping to save itself from Credit Suisse.
“The Credit Suisse disaster showed that Swiss authorities, including the SNB, were completely unprepared for this imminent crisis,” Ivan Langwiler of the University of Basel, a member of the SNB Watch Group that studies the Swiss central bank, told Askume.
“On the one hand, it’s an incentive to do better in the future, but it also raises the question of how the system would work if UBS found itself in a similar situation.”
Will it be the same again?
Chairman Jordan led the SNB’s response to the Credit Suisse collapse and met with government ministers and bankers throughout 2022, people familiar with the matter told Askume.
Together, he and Schlegel, 48, provided billions of Swiss francs in emergency liquidity, first to keep Credit Suisse afloat and then to facilitate its takeover by UBS .
In July, Jordan blamed the bank’s management for the collapse of Credit Suisse and said the global financial crisis could have been averted by actions by Swiss authorities.
Schlegel defended the SNB’s actions, in particular against calls for the nationalization of Credit Suisse while the central bankThere is also a list of lessons to be learned .
A key task for the incoming head of the SNB’s governing council, responsible for banking stability, will be to help shape regulations, including tighter capital rules envisioned for the newly expanded UBS Group AG, though the final decision will rest with the government and parliament.
“We are working closely with the government and people at FINMA to develop good measures,” he told Askume in an interview last week. “It is very important that we learn … draw the right conclusions and take the right measures.”
Although banking supervision problems remain, the SNB has been praised for controlling inflation, which fell to 1.1% last month .
Stefan Gerlach, chief economist at EFG Bank, said maintaining the bank’s strong record on monetary policy would be a key focus of the new SNB president, although Jordan “will be a tough act to follow in terms of monetary policy.”
Schlegel is a vegetarian bass guitarist who favors the Zimbabwean instrument kalimba and seems more unconventional than Jordan, who prefers simplicity.
But analysts expect his former boss, who joined the SNB’s research unit in 2003 and joked in an interview with a Swiss newspaper that he would remain Jordan’s apprentice “to some extent”.
Thomas Stucki, chief investment officer at the Cantonal Bank of St Gall and former head of asset management at the Swiss National Bank, said: “Schlegel grew up at the SNB, so I don’t expect any changes, especially not at first.
It seems unlikely that Schlegel would seek to clearly distance himself from Jordan at the same time as Switzerland is trying to recover from the Credit Suisse crisis.
Asked how his approach differs from that of his mentor, Schlegel told Askume , “I think the key question is what is the same. ‘The same’ would be licensing and price stability.”
(1 USD = 0.8446 Swiss Francs)
