Switzerland is about to drop one of its most highly anticipated reports: the findings from its investigation into Credit Suisse’s shocking collapse in 2023.

The report, led by the Parliamentary Investigation Commission (PUK), will get deep into the chain of events that caused the downfall of one of the nation’s banking giants.

Apparently, this is about holding people accountable and reshaping how Swiss banking operates moving forward. The Swiss government has already drafted proposals for stricter financial regulations, including massive capital requirements for UBS, which swallowed Credit Suisse in a rushed deal.

But here’s the thing: while the rest of the world’s banking hubs are easing up on regulations, Switzerland is leaning in hard.

The PUK’s unprecedented power

The PUK is Switzerland’s nuclear option when it comes to investigations. This commission can drag in witnesses, demand confidential documents, and get to the root of problems in a way few other political tools can.

In the 18 months since its formation, the PUK has grilled over 60 key players. So far, it has spoken to Swiss National Bank officials, Swiss Financial Market Supervisory Authority (FINMA) regulators, and top executives from both Credit Suisse and UBS.

The central question? How did regulators and the government allow Credit Suisse to spiral out of control? The commission isn’t wasting time picking apart every management mistake; instead, it’s digging into how the system itself failed.

Was the forced sale to UBS really the best option, or was it a panic move by the government to save face? What steps did regulators take—or fail to take—before the bank was shoved into UBS’s arms?

According to insiders, FINMA, the Swiss financial regulator, could come out of this looking the worst. Critics have long said the agency didn’t act fast or decisively enough.

FINMA, of course, claims its hands were tied by legal limitations. But that argument might not hold up if the report uncovers missed opportunities to intervene before things got out of hand.

UBS braces for impact

For UBS, this report could be a nightmare. The worst-case scenario involves regulators demanding 100% capital backing for UBS’s foreign subsidiaries. Translation: UBS might need to come up with an extra $25 billion in capital.

That would put the bank at a severe disadvantage compared to its global competitors, cutting into profits and possibly making investors rethink their confidence. UBS Chairman Colm Kelleher and CEO Sergio Ermotti have been vocal about their opposition to this level of regulatory overreach.

They’ve argued that Switzerland’s financial rules are already among the toughest in the world and that more regulation could crush the competitiveness of the country’s banking sector. They’ve also made it clear they’re ready to roll with most of the government’s proposed changes — just not the ones that hit them where it hurts the most.

UBS isn’t waiting around for lawmakers to decide its fate. The bank is already overhauling its emergency protocols, making sure it won’t end up in a Credit Suisse-style crash. The Swiss finance minister has hinted that UBS’s plans could influence how much extra capital it will ultimately need to hold.

Finger-pointing and fallout

The PUK report is expected to name names, and some big ones are already in the spotlight. FINMA President Marlene Amstad is under scrutiny for her agency’s failure to act aggressively when the warning signs at Credit Suisse were impossible to ignore.

Swiss newspaper Blick has hinted that FINMA will take the brunt of the blame.

Then there’s Ueli Maurer, the former finance minister. Just three months before Credit Suisse’s collapse, he confidently told the public the bank would “get its act together.”

Now, the PUK has extended its investigation timeline all the way back to 2015—Maurer’s entire tenure. That’s not a good sign for him. His successor, Karin Keller-Sutter, might escape unscathed since she only stepped into the role in 2023.

But let’s not forget: she played a key role in negotiating the UBS takeover, so she’s not completely out of the woods. The SNB isn’t off the hook either. Former chief Thomas Jordan could face heat for how the central bank handled Credit Suisse’s liquidity needs during the crisis.

Critics say the SNB’s rigid collateral requirements added unnecessary pressure on the bank. The SNB, for its part, denies this and says it’s already expanding its liquidity regime to avoid a repeat disaster.

Past PUK investigations have ended careers. One 1996 probe into a pension fund scandal accused the finance minister of “willful deception.” Don’t be surprised if this report leads to similar political casualties.

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