Federal Council adopts too-big-to-fail evaluation report

Bern, 18.02.2015 - Today, the Federal Council adopted its evaluation report on Switzerland's too-big-to-fail (TBTF) provisions. The identified need for action is based on the final report of the group of experts on the further development of the financial market strategy. The Federal Council has instructed the Federal Department of Finance to prepare the legal adjustments, which primarily concern more stringent capital requirements.

In Switzerland, the TBTF issue has been governed by the Banking Act since 1 March 2012, which should prevent systemically important financial institutions from having to be bailed out using taxpayers' money in the event of a crisis. In accordance with Article 52, the Federal Council has to review the too-big-to-fail provisions with regard to comparability and the extent to which the corresponding international standards are implemented abroad no later than three years after entry into force.

The group of experts comprised of high-ranking individuals from the private sector, authorities and academia which was appointed by the Federal Council and led by Professor Aymo Brunetti conducted an in-depth review of Switzerland's TBTF regime and published its recommendations on 5 December 2014. The Federal Council also believes that the assessment of Switzerland's approach is generally positive by international standards. Consequently, it is not necessary to realign the regulatory model. However, additional measures and adjustments are required to boost the resilience of systemically important banks further and to make their restructuring or orderly resolution possible without taxpayers incurring any costs. One of the recommendations is thus to increase the capital requirements and to continue to follow countries with the world's highest requirements with regard to both risk-weighted capital and the unweighted leverage ratio.

The Federal Council has instructed the Federal Department of Finance (FDF) to submit proposals for the necessary legal adjustments by the end of 2015. A working group under the leadership of the FDF and with representatives of the Swiss Financial Market Supervisory Authority FINMA and the Swiss National Bank is to be formed for this purpose. The financial institutions concerned are also to be included.

Address for enquiries

Mario Tuor, Communications, State Secretariat for International Financial Matters SIF
Tel. +41 58 462 46 16, mario.tuor@sif.admin.ch


The Federal Council

Federal Department of Finance