According to Karin Keller-Sutter, Credit Suisse (CS) could not be wound up according to the «too big to fail» rules as stipulated in banking law in March 2023 due to «international legal risks.» «There are significant doubts that recapitalization through the forced participation of creditors, that is, a ‹bail-in›, would work,» explains the head of the Federal Department of Finance in an interview with the «Frankfurter Allgemeine Zeitung.» And she gets quite specific: «I'm looking mainly at the USA. There, the big banks are heavily invested.»

The Federal Councillor points out that she had only been in office for two months «when Credit Suisse started to really burn» – implicitly referring to the actions of her predecessor, Ueli Maurer, without mentioning him. She emphasizes the importance of a Senior Managers Regime, meaning that stricter rules should apply to those responsible for managing a bank, up to and including the clawback of already paid bonuses.

More accountability, more capital

She also echoes FINMA Director Stefan Walter in an interview with the NZZ regarding the future capital requirements for the major bank UBS. The capital backing of foreign subsidiaries must be so substantial that they could be sold or liquidated in a crisis without harming the Swiss parent company. «That was precisely the problem with CS,» Keller-Sutter notes.

Since the 2008 financial crisis, regulatory authorities – not only in Switzerland – have been preaching that a globally systemically important bank must be allowed to fail and be wound up without the taxpayer and the state being asked to foot the bill. Karin Keller-Sutter shares this direction and refers to the 22 measures proposed by the Federal Council in its report on banking stability published in April.

Where Karin Keller-Sutter's father was right

As a liberal, she does not believe that legislation alone can solve everything. «It also takes humility to say that with the knowledge of the present, we cannot fully control the future.» A good motto, also for areas other than banking regulation and other bodies than the national government.

Regarding whether she considers Sergio Ermotti's total compensation for nine months as CEO of UBS last year, totaling over 14 million Swiss francs, as appropriate, the Finance Minister, who is quite experienced in dealing with large sums, also doesn't mince her words. Her father always said that one couldn't earn so much money with work – «he was right.»