Swiss central bank

promises regulation
review after collapse of
Credit Suisse
The Swiss National Bank on Friday pledged to review banking regulations
during its annual general meeting in Bern, following recent turmoil involving
Credit Suisse.

Set against a backdrop of protest over its action on climate change and its
role in the emergency sale of Credit Suisse to Swiss rival UBS, Thomas
Jordan, chairman of the governing board at the SNB, said banking regulation
and supervision will have to be reviewed in light of recent events.

“This will require in-depth analysis ... quick fixes must be avoided,” he
said, according to a statement.

The central bank played a key role in brokering the rescue of Credit

Suisse over the course of a chaotic weekend in March, as a flight of deposits
and plummeting share price took the 167-year-old institution to the brink of
collapse.

The deal remains mired in controversy and legal challenges, particularly over
the lack of investor input and the unconventional decision to wipe out 15
billion Swiss francs ($16.8 billion) of Credit Suisse AT1 bonds.

The demise of the country’s second-largest bank fomented widespread

discontent and severely damaged Switzerland’s long-held reputation for
financial stability. It also came against a febrile political backdrop, with federal
elections coming up in October.
Jordan said Friday that future regulation will have to “compel banks to hold
sufficient assets which they can pledge or transfer at any time without
restriction, and which they can thus deliver as collateral to existing liquidity
facilities.” He added that this would mean his central bank could would be able
to provide the necessary liquidity, in times of stress, without the need for
emergency law.

The SNB faced questions and grievances from shareholders about the Credit
Suisse situation on Friday, but the country’s network of climate activists also
sought to use the central bank’s unwanted spotlight to challenge its
investment policies. Activists failed to gain traction with a vote to reprimand
the SNB’s investment decisions, with just 0.8% of shareholders backing the
move, according to Reuters.

Unlike many major central banks, the SNB operates publicly-traded company,
with just over half of its roughly 25 million Swiss franc ($28.1 million) share
capital held by public shareholders — including various Swiss cantons (states)
and cantonal banks — while the remaining shares are held by private
investors.

More than 170 climate activists have now purchased a SNB share, according
to the SNB Coalition, a dedicated pressure group spun out of Alliance
Climatique Suisse — an umbrella organization representing around 140 Swiss
environmental campaign groups.

Around 50 of the activist shareholders were attendance on Friday, and

activists had planned to make around a dozen speeches on stage at the
AGM, climate campaigner Jonas Kampus told CNBC on Wednesday. Protests
were also held outside the event with Reuters reporting that the campaigners
totaled 100, leading to tight security.

The group is calling for the SNB to dispose of its stock holdings of “companies
that cause serious environmental damage and/or violate fundamental human
rights,” pointing to the central bank’s own investment guidelines.

In particular, campaigners have highlighted SNB holdings

in Chevron, Shell, TotalEnergies, ExxonMobil, Repsol, Enbridge and Duke
Energy.

Members of a Ugandan community objecting to TotalEnergies’ East African

Crude Oil Pipeline, were also set to attend on Friday, with one planning to
speak on stage directly to the SNB directorate.
As well as a full exit from fossil fuel investments, activists are demanding that
the SNB implement the “one for one rule,” — a capital requirement designed
to prevent banks and insurers benefiting from activities that are detrimental for
the transition to net zero.

In this context, the SNB would be required to set aside one Swiss franc of its
own funds to cover potential losses for each franc allocated to financing new
fossil fuel exploration or extraction.