Federal Council adopts report on systemically important banks
Bern, 03.07.2019 - During its meeting on 3 July 2019, the Federal Council adopted the third evaluation report on systemically important banks, concluding that the regulatory model does not need to be fundamentally adapted. The gone-concern capital requirements are to be adjusted for the two big banks.
The plight or failure of a systemically important bank can lead to considerable distortions in the financial system and negative consequences for the economy as a whole. The existing rules set out in the Banking Act are intended to prevent banks from having to be bailed out using taxpayers' money. The Federal Council must carry out a review at two-year intervals to examine whether these provisions are in line with the international standards, as well as to check how the standards have been implemented abroad. The Federal Council has adopted a report on this subject every two years since 2015.
In this third report, the Federal Council concludes that the Swiss regulatory approach is fundamentally in line with international developments and therefore does not require any fundamental adjustment.
However, the Federal Council considers it necessary to make specific adjustments to the gone-concern capital requirements for Swiss units of the two big Swiss banks. To this end, on 5 April 2019 the Federal Department of Finance (FDF) initiated a consultation on the revision of the Capital Adequacy Ordinance (CAO). Gone concern capital requirements are intended to ensure that a bank in difficulty can be restructured and wound up in an orderly manner without financial assistance from the state. The Federal Council also sees a need for clarification regarding the discount system, the staggered timing of bail-in bonds (conversion of debt into equity) and the liquidity requirements for systemically important banks.
Address for enquiries
Anne Césard, Communications, State Secretariat for International Finance SIF
Tel. +41 58 462 62 91, anne.cesard@sif.admin.ch
Publisher
The Federal Council
https://www.admin.ch/gov/en/start.html
Federal Department of Finance
https://www.efd.admin.ch/efd/en/home.html
