The Federal Banking Commission (FBC) is housed in a typical Swiss setting. Its director Daniel Zuberbuhler sits in an austere building at the back of the Department of Finance in Bern
The FBC may function independently from the Finance Ministry, but it is firmly embedded within the budget and personnel restrictions of federal administration. It is not an easy position for an agency, having to attract and retain the brightest brains of the financial industry. No wonder that the FBC director is likely to welcome a bit more flexibility in the remuneration of his people than the state system allows.
At present, some 150 accountants, lawyers, financial experts and assistants monitor the Swiss financial world. They oversee the Swiss banks, securities firms, investment funds and the securities exchanges. The FBC is equally involved in public take-over bids for listed companies.
In an interview with Swissnews, FBC director Daniel Zuberbuhler explains what it means to supervise one of the major finance centres of the world.
Swiss News: with some 350 different banks, one third of the internationally invested private assets of the world are managed in Switzerland. How do you monitor this global business with such a small agency?
In addition to the banks we also supervise some 70 securities firms, 700 Swiss investment funds and oversee the distribution of more than 4000 foreign investment funds.
The FBC does not perform this task alone. We outsource the onsite examinations to private external audit firms that are licensed by us to carry out the financial and regulatory audit in the supervised institutions. Our system differs essentially from that in, for instance, the USA, where a large force of on-site examiners is employed by the agencies. The Federal Banking Commission has eight licensed firms performing the audits for us. The big four Ernst & Young, Price Waterhouse Coopers, KPMG and Deloitte & Touche are joined by smaller local firms. In doing so, they perform a public duty, supervised by us.
These firms are intimately involved with the industry they monitor for the Swiss authority. How do you ensure objectivity?
Switzerland probably has gone the furthest in this so-called dualistic system, although some other European supervisors also partially rely on external auditors. In our system it is absolutely vital that the audit firms permanently fulfil our strict licensing requirements, remain independent from their clients and are subject to a systematic quality control by the Banking Commission. They have to comply with detailed regulatory guidelines and we can order them to perform in-depth audits on particular issues. We can take sanctions against the audit firms, such as the removal of a lead audit partner, organisational changes, criminal referrals or ultimately withdraw their license. When there are doubts about the result of an audit, we can order an extraordinary audit by another firm.
Two years ago we were assessed by the IMF...