Even the Swiss regulator, Finma, seems to be getting it, with newly appointed director Stefan Walter steering a far stricter line in tone and action in recent weeks.

But even as things get back to normal, one key thing that still sticks out is the general attitude domestic banks and bankers have toward regulation. 

Repeated statements have been made about the costs involved in this or that new regulatory requirement - with much discussion centered around how disciplinary actions, fines, and penalties have not proven to be very effective tools. From a distance here in Asia, it looks odd that anyone would even be sticking up their head to say anything given that the major bank population in Switzerland has become exactly one – down from three in the 1990s and four, even five, before that.

From the point of view of one of the more assiduously managed regional jurisdictions, the arguments related to fines and enforcement actions seem naive - particularly as it is difficult to shunt them all into the overly specific pigeonhole of plain effectiveness. In practice, they can be wielded as a quasi-political tool that helps embolden internal control and compliance functions against the front line and management. In cases where there is a monitor or external auditor installed, a hefty enforcement action can function as a much-needed stick, even a threat. More often than not, it is not even about changing future behavior but just about completing the agreed and required mitigation work at hand. And on a certain level, it is one of the only ways that authorities can bluntly talk the language that the front line and management really and truly get - money.

Sham Objective Rationality

Internally, bank employees frequently have to coax their statements, reports, and feedback in a kind of sham objective rationality. There is constant pressure to put this palatable gloss on things while never veering towards anything that could be misinterpreted as obstructive or negative.

But in the case of UBS, many senior executives in the wider financial hub seem to have no problem adopting a tone that would be much frowned upon if it ever came from their direct reports or the lower ranks.

Lip Service

The attitude they exude is almost like that in a committee, a sub-committee, a task force, or just a plain meeting where the executives and relationship managers sit beside each other and easily banter among themselves while paying lip service to the control functions playing catch-up with inferior levels of knowledge or information about the case or situation involved.

Instead, they should take a page from their book, and the institutional cultures most of them have grown up in, by saying it is imperatively obvious, even urgent, that more regulation is needed in Switzerland and how and where it would have the most impact.

No Unhinged Banking

In other financial hubs, there is a larger, and more generalized, skepticism of banks and bankers - a strong belief that they should never be left to their own devices because of the damage they can do.

Regulations in many other jurisdictions reflect that. Such rules, and the related regulatory micromanagement, are not new to many domestic bankers who have worked outside the country. Most of the medium-sized and larger institutions have extensive global franchises, and the institutional knowledge of the ins and outs of each financial center is there.

Not Yet There

Many of those businesses overseas were also established, built, taken over, or restructured in a way that very clearly had to pay just as much heed to every single banking rule or directive from the ground up as they did to market segments, clients, and services.

Whatever else you say, Switzerland is not there yet when it comes to ensuring a sounder and more stable financial system for the decades ahead. Senior bankers should be advising the government and regulators – positively – as to what they believe works internationally, rather than being petulant and dismissive.

If nothing else, the way things stand now, it is just not a good look. It leaves a bad taste in everyone’s mouth - not to mention being totally on the wrong side of future Swiss business history.

«The Double Take» is a new feature on finews.com that will be published regularly that comments on thematic issues affecting the Swiss banking hub.

Andrew Isbester, the author, spent almost two decades working for major Swiss and European financial institutions, working in a variety of functions including communications, financial reporting, business risk, and financial crime. He currently is an editor-at-large in the wider finews group.