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Culture of secrecy caused confusion, report found

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Key officials held undocumented 'non-meetings'

By John O'Donnell, Stefania Spezzati and Dave Graham

LONDON/BERN, Dec 20 (Reuters) - Secret meetings,

mistrust among officials and attempts to downplay the gravity of

Credit Suisse's problems hamstrung Switzerland in the run-up to

the bank's collapse in 2023, an inquiry by lawmakers found on

Friday.

Almost two years after the implosion of the country's

second-largest bank, Swiss lawmakers issued a 560-page-plus

report on Friday revealing a culture of secrecy at the centre of

Switzerland's government and detailing the confusion it caused.

Credit Suisse's demise tainted Switzerland's reputation as a

major centre of world finance and a safe haven, and debunked the

belief that global banks are safer now than in the past or that

governments have a blueprint to cope when they wobble.

The report grants a rare glimpse of the culture of secrecy

that forms the bedrock of Switzerland's status as a reliable

centre to hoard offshore wealth. That discretion, the report

found, had permeated government, sowing disarray.

In the months-long investigation, whose proceedings were

themselves behind closed doors, lawmakers singled out so-called

"non-meetings" among officials ahead of the bank's collapse.

Those informal gatherings went undocumented for fear of

leaks, leaving key government ministers in the dark and

hampering preparations for the eventual state-backed rescue and

sale of Credit Suisse to its larger rival, UBS.

The lawmakers said such non-meetings were favoured by the

former Swiss National Bank president Thomas Jordan, as he

scurried to avert a financial disaster and sought to marry

Credit Suisse with UBS.

The country's former finance minister, Ueli Maurer, also

repeatedly opted for informal conversations without a written

record, the authors said.

This often left Swiss government officials without the

documents they needed outlining the bank's problems or possible

solutions. The practice prompted complaints and conflict within

government at the time.

The report highlighted one instance where the Swiss

president and the chancellor, a senior official, spoke in early

November 2022, as the bank was in the throes of crisis. The two

had not received the paperwork they needed because the finance

ministry feared a leak.

Later, the president called the finance minister, Maurer,

who told him that no meeting was necessary "as the situation at

CS (Credit Suisse) had calmed somewhat and one must avoid

creating any upset".

A few days later, Maurer met with the cabinet to talk about

the bank's troubles, prompting demands from Swiss officials that

he supply written information about a possible intervention in a

crisis.

Days later, Maurer and Jordan held another non-meeting with

the then-Credit Suisse chairman, Axel Lehmann, discussing issues

such as a possible sale of the bank.

The report's authors said they had not managed to

reconstruct precisely what the men discussed.

The lawmakers also highlighted meetings between the central

bank chief and Lehmann as the bank haemorrhaged tens of billions

of dollars in late 2022.

Marlene Amstad, who chaired Swiss regulator FINMA, was often

kept in the dark about such meetings and highly critical of this

practice, said the report, compiled from interviews with those

involved.

The parliamentary enquiry said it could not establish how

many meetings took place, given the lack of written records.

At some of the non-meetings, the-then chairman of the bank

was described as upbeat.

He was not alone. As the bank slid further into crisis, in a

December 2022 interview broadcast on Swiss television, Maurer

suggested: "You just have to leave them alone for a year or

two."

His successor, Karin Keller-Sutter, ended the practice of

informal meetings but also feared leaks, the report said.

It was only at the beginning of February 2023 that the

seven-strong cabinet that governs Switzerland received paperwork

on dealing with the crisis at the bank.

Weeks later, Credit Suisse, on the brink of a chaotic

collapse, was sold to UBS.