The US Federal Reserve and the Federal Deposit Insurance Corporation have identified shortcomings in Credit Suisse’s 2021 dissolution plan. This relates to the bank’s bankruptcy strategy. Now the bank has to look at the books.
On Friday evening, the US authorities announced that the CS plan submitted in 2021 was flawed in two areas. Specifically, it’s about cash flow predictability and, on the other hand, about bank governance in American business.
A letter published on the same day and addressed to the bank by the authorities stated, “The target plan for 2021 contains insufficient information on the basic elements of capital, liquidity and the company’s plan to implement the recapitalization, as required by the decision plan regulation.” .
The authorities are also taking a hard line on the bank’s cash flow projections: “Credit Suisse’s inability to adequately address the 2018 liquidity crisis before submitting the 2020 plan or more than a year later is cause for serious concern.” Because as early as 2018, the bank was aware of the shortcomings in this area and later found that they had not been adequately addressed.
Now, the CS has until February 28, 2023 to prepare a detailed project plan to enhance oversight of decision planning and operations in the United States. The relevant authorities then check it and provide feedback. They say the bank must then submit the revised plan by May 31. In the next plan, due in 2024, the bank would have to demonstrate that weaknesses in cash flow projections have been remedied.
CS was not the only institution reprimanded: in addition to the main Swiss bank, the banking supervisory authorities also identified the inadequacy of the plan to disband competitor BNP Paribas, which, however, is not as serious as the deficiency. In addition, last month the authorities instructed Citigroup to improve its plan. (sda/awp)
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