Bank resolution framework would work for UBS, FSB says

THE current bank resolution framework would work if UBS Group got into trouble and there was no takeover by another bank possible, according to the secretary general of the Financial Stability Board (FSB).

“We believe that the framework is sound and can be used for that purpose,” John Schindler told journalists on Monday (Jan 22) in Basel, Switzerland.

He added that while there are “some operational challenges” which the FSB will “continue to look at”, the framework would also have worked for resolving Credit Suisse.

The Swiss government and regulator opted not to put Credit Suisse into a wind-down procedure as it faced a collapse in confidence last year, instead brokering the takeover by UBS. The decision raised doubts globally as to whether the Too-Big-To-Fail rules set down after the last financial crisis were fit for purpose.

“The Swiss chose to go with another option and the outcome was that markets eventually calmed down,” Schindler said. “So I thank them for taking action that didn’t lead to disrupting the financial system.”

The FSB is an international body that coordinates national financial supervisors and international standard-setting institutions in developing stable regulation for banks. It is hosted by the Bank for International Settlements based in Basel. BLOOMBERG