Are Banks Really Supervised?

The above question is easy to answer, and the answer is a resounding NO, based on the last ten years! That banks are not being adequately supervised, is quite apparent when we examine the world’s biggest and what should be the safest banks.

One of the biggest Swiss banks, Credit Suisse, was in fact able to run up total losses of over €20 billion during the last 11 years. According to the latest reports, they managed to make exceptionally large losses at least16 times between 2011 and  2021. There was no single fraudster at the bank doing unauthorised trades, but many different departments spread over time  and in Asia, Africa, Europe and America. They involved bond issues to payments business, trade finance to share trading, and housing loan activities. The breadth and diversity of the wrongdoing illustrates the total lack of controls by management, their board, their auditors and regulators for over a decade. Single losses and fines amounted to millions of dollars almost twice a year without being stopped by internal or external supervisors or management.

How could such losses and wrongdoings remain unseen and under the radar, when this bank is regarded by the European Central Bank (ECB) and the Bank of International Settlements (BIS) as “too big to fail”.

Their latest losses of over €10 billion were caused by dealings with 2 clients – one called Greensill and the other called Archegos. One or both are also clients of many of the world’s biggest and greatest banks like Goldman Sachs, Morgan Stanley and Wells Fargo, UBS, Credit Suisse, and Japan’s Nomura.

This week Credit Suisse announced that the head of their investment bank and the group’s chief risk and compliance officer have been sacked! One wonders why others at a more senior level have not been fired… 

Whatever the final outcome, the story speaks realms of what has been going on in banks for years. The same stories are also to be heard with Wirecard where banks and regulators just refused to confront the management of their national FinTech hero!

Many Italian, German and French banks are poorly managed yet the ECB and regulators do very little other than pouring in taxpayers money to support them while the urgently required reforms are not put in place. And now the former head of the ECB is PM of Italy… 

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