Accountability

The Banking Commission’s investigation of 2008

The first official account of the causes of the losses came from the supervisor. On 30 September 2008, two weeks before the rescue, the Banking Commission completed a summary report on its investigation into the write-downs of UBS. A detailed confidential report had been delivered to the bank on 24 September. The public summary appeared together with the rescue package on 16 October 2008. Its central legal finding was severe. The Banking Commission concluded that UBS had neither correctly assessed nor adequately limited or controlled the risks associated with the retention of super senior CDOs and other asset-backed positions. It described this as a grave omission and as a violation of the requirement of proper business conduct, one of the licensing conditions of the Banking Act.¹

The same report drew limits that shaped the later debate. The Banking Commission found no evidence that managers had purposefully damaged the bank or consciously incurred incalculable risks. Having concluded that the current corporate bodies of UBS met the requirements of the law, it supported the remedial plan that the bank had drawn up without ordering specific measures of its own. It did, however, describe the partly considerable termination payments made in cash to some of the persons responsible as irritating, even though they had a clear contractual basis. The report thus combined a finding of institutional failure with the absence of individual sanctions, a combination that the Swiss public found hard to accept. It also acknowledged, in a single broadly worded sentence, that even the relevant supervisory authorities had failed to recognise the imminent risks in time.²

FINMA’s report of 2009

The Banking Commission was merged into the new Swiss Financial Market Supervisory Authority, FINMA, on 1 January 2009. One of the first public acts of the new authority was a report on the financial crisis and the conduct of supervision, published on 14 September 2009. FINMA found that the causes of the crisis and the dangers inherent in it had not been fully recognised in time by all participants, that there had been individual deficiencies and occasionally insufficient enforcement powers in banking supervision, and that the crisis management of the Banking Commission had worked effectively once it had been activated in August 2007.³

The report was more candid about the resources of the supervisor than about its decisions. The department for the supervision of the big banks had about 25 staff in 2007 and lacked, in FINMA’s words, seniority and selected specialists with practical experience. It identified gaps in six areas: capital requirements that were insufficient for crisis scenarios, the absence of liquidity standards, uncontrolled balance sheet growth, inadequate analysis of complex risk positions, limited enforcement powers and the failure to recognise systemic risks. Overall, FINMA found no specific misconduct on the part of the Swiss supervisory authorities beyond the general failure of supervisors worldwide.⁴ The lessons it drew anticipated much of the later regulatory agenda. They included higher capital, stricter liquidity requirements, a leverage ratio and a circular on remuneration, which was to enter into force on 1 January 2010.⁵

The Parliamentary Control Committees and the question of an inquiry

The political review was entrusted to the Control Committees of the two chambers, which examined the conduct of the Federal Council, the Federal Department of Finance, the National Bank and the supervisory authorities during the financial crisis and in the handover of UBS client data to the United States. Their report of 30 May 2010 concluded that the authorities had failed in the early detection of the crisis. It found that the Banking Commission had learned of the subprime exposure of UBS only in March 2007, at a time when the management of the bank still held an unrealistic assessment of its possible losses. The committees criticised above all the governance of the Federal Council, which had been kept uninformed for months, and recommended that the government be integrated into the crisis organisation, that the objectives of financial market supervision be clarified by law and that the cooperation and exchange of information between the National Bank and FINMA be strengthened. A committee motion called for a statutory obligation to keep minutes of Federal Council meetings. On the substance of the rescue, however, the committees accepted that the measures could be regarded as appropriate, relying on the assessments of international experts and on the positive effects of the package on financial stability.⁶

The report did not end the debate. The National Council voted in June 2010 to set up a parliamentary commission of inquiry, the strongest instrument of parliamentary oversight, which had been used only a few times in the history of the federal state. The Council of States rejected the proposal on 14 June 2010 by 28 votes to 15. The majority, drawn mainly from the Liberals and the Christian Democrats, argued that the report of the Control Committees had clarified all relevant questions. They added that a commission of inquiry could examine only the conduct of the authorities, leaving UBS itself outside its reach. The minority answered that only a commission of inquiry carried the political weight needed to answer the remaining questions, including the influence of UBS on the assessments of the federal authorities.⁷ The refusal of 2010 contrasts with the decision of 2023, when both chambers set up a parliamentary commission of inquiry into the conduct of the authorities in the Credit Suisse crisis. Chapter G.V discusses that inquiry.⁸

Shareholders, discharge and the decision not to sue

The most direct form of accountability lay with the shareholders. Under Swiss company law, the general meeting decides each year whether to grant discharge to the members of the board and the executive management. A resolution granting discharge bars claims of the company and of the approving shareholders for facts that were disclosed to the meeting. Shareholders who did not approve retain the right to sue on behalf of the company for six months after the resolution.⁹ At the annual general meeting of 14 April 2010, held in the St. Jakobshalle in Basel, the board proposed discharge for the financial years 2007, 2008 and 2009.¹⁰

The shareholders refused discharge for 2007. A majority of 52.75 per cent of the votes cast, representing about 882 million shares, rejected the proposal, while discharge for the other years was granted. The Ethos Foundation, which represented Swiss pension funds, had campaigned against discharge, citing the heavy losses and the damaging tax dispute in the United States, which also concerned former officers such as Marcel Ospel, Peter Kurer, Peter Wuffli and Marcel Rohner. After the vote, its director Dominique Biedermann renewed the call for legal action against the former directors. The chairman Kaspar Villiger described the vote as an expression of resentment, and said that the board would maintain its decision not to sue unless new evidence emerged.¹¹ Swiss newspapers called the vote historic. One commentary summarised the public mood by observing that managers who had sold shares worth CHF 150 million at peak prices and then presented losses of CHF 50 billion could not simply be absolved.¹² It remained for almost a decade the only occasion on which UBS shareholders refused discharge.¹³

In mid-October 2010, UBS published a Transparency Report to the Shareholders of UBS AG, which it had promised in response to the recommendations of the Control Committees. The report covered both the subprime losses and the American cross-border business. It identified the absence of balance sheet limits, insufficient risk assessment, an inadequate compliance culture and a false sense of security despite warning signs. The historian Tobias Straumann, who contributed to the analysis, described a management that had been complacent and had wrongly believed that everything was under control. Villiger wrote that what had happened should not have happened.¹⁴ At the same time the board announced that it would not bring civil claims against its former officers. It argued that litigation would be expensive without any guarantee of success and would attract adverse publicity. Villiger added that, whenever a bank sued its own officers, American lawyers would read this as an admission of guilt, a consideration of weight for a bank still exposed to litigation in the United States. The large institutional investors declined to sponsor a claim themselves, so that the six-month period for shareholder actions expired in October 2010 without a suit.¹⁵

Some of the former executives made voluntary gestures. In November 2008 Marcel Ospel, the former vice-chairman Stephan Haeringer and the former chief financial officer Marco Suter waived payments of about CHF 33 million in total, of which Ospel’s share amounted to more than two thirds. Peter Wuffli separately waived CHF 12 million.¹⁶ No former member of the management of UBS was ever held liable in civil or criminal proceedings for the losses of 2007 and 2008. The contrast with the scale of the public intervention shaped Swiss attitudes to bank pay for a decade and fed directly into the popular vote of 2013.

Notes

1. SFBC, Subprime Crisis (as above), conclusions. ↩
2. SFBC, Subprime Crisis (as above), general findings. ↩
3. FINMA, press release “FINMA legt Bericht zur Finanzmarktkrise vor”, 14 September 2009, https://www.finma.ch/de/news/2009/09/mm-bericht-finanzmarktkrise-20090914/. ↩
4. FINMA, Finanzmarktkrise und Finanzmarktaufsicht (as above), chapter on lessons learned and overall assessment. ↩
5. FINMA, press release of 14 September 2009 (as above). ↩
6. GPK report of 30 May 2010 (as above), assessment of the measures of 16 October 2008. ↩
7. swissinfo.ch, “UBS-Affäre: PUK definitiv vom Tisch – Ständerat sagt deutlich Nein”, 14 June 2010, https://www.swissinfo.ch/ger/ubs-affaere-puk-definitiv-vom-tisch-staenderat-sagt-deutlich-nein-af/9097330. ↩
8. Parlamentarische Untersuchungskommission (PUK), “Geschäftsführung der Behörden im Kontext der Notfusion der Credit Suisse”, report of 17 December 2024, summary (extract), https://www.parlament.ch/centers/documents/de/Auszug%20Bericht%20PUK%2019.12.2024%20Zusammenfassung%20D.pdf, which records that the two chambers set up the committee on 8 June 2023. See also chapter G.V. ↩
9. Article 758 of the Swiss Code of Obligations as in force in 2010. swissinfo.ch, “Ex-UBS chiefs dodge legal action – for now”, 14 October 2010 (as above), states that “under Swiss law, shareholders had six months to file law suits for the period 2008-9”. ↩
10. UBS, “Annual General Meeting 2010”, https://www.ubs.com/global/en/investor-relations/events/agm/archive/2010.html. ↩
11. IPE, “Ethos demands legal action over former UBS board”, April 2010, https://www.ipe.com/ethos-demands-legal-action-over-former-ubs-board/34653.article. ↩
12. swissinfo.ch, “UBS has ‘witnessed a Waterloo’”, 15 April 2010, https://www.swissinfo.ch/eng/business/ubs-has-witnessed-a-waterloo/8677502. ↩
13. finews.com, “Investors Deny Backing of UBS Leaders”, May 2019, https://www.finews.com/news/english-news/36336-ubs-discharge-approval-board-management-swiss-law. ↩
14. WealthBriefing, “UBS Cites Cultural Failings, Complacent Management In Probing New Report”, October 2010, https://www.wealthbriefing.com/html/article.php/ubs-cites-cultural-failings,-complacent-management-in-probing-new-report. ↩
15. swissinfo.ch, “Ex-UBS chiefs dodge legal action – for now” (as above). ↩
16. WealthBriefing Asia, “Former UBS Chairman, Colleagues Forgo Pay”, 26 November 2008, https://www.wealthbriefingasia.com/article.php?id=15147. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.