Federal Council adopts report on systemically important banks
Bern, 04.06.2021 - During its meeting on 4 June 2021, the Federal Council adopted the fourth evaluation report on systemically important banks. The report concludes that, as things currently stand, no fundamental changes to the Swiss regulatory landscape are needed. However, the liquidity requirements for systemically important banks should be adjusted.
the financial system and negative consequences for the economy as a whole. In Switzerland, the two big banks Credit Suisse and UBS, as well as PostFinance, the Raiffeisen Group and Zürcher Kantonalbank are designated as systemically important.
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 regularly checks whether these provisions are in line with the international standards, and how the standards have been implemented abroad. The Federal Council has adopted a report on this subject every two years since 2015.
In this fourth report, the Federal Council concludes that, by international standards, the Swiss regulatory approach does not require any fundamental adjustment. The current design of the requirements ensures an appropriate level of resilience for systemically important banks. As a result, both internationally focused big banks, whose stability is of particular relevance for Switzerland owing to their size, went into the COVID-19 pandemic in good shape both to face the challenges posed by the difficult environment and to support the real economy.
Nonetheless, the Federal Council pinpoints some areas for action in its report. For example, a working group comprising representatives from the Federal Department of Finance (FDF), the Swiss Financial Market Supervisory Authority (FINMA) and the Swiss National Bank (SNB) is tasked with identifying how the special, ordinance-level liquidity requirements for systemically important banks might be adjusted. An analysis has revealed that the liquidity requirements currently imposed on systemically important banks would probably not be enough to cover liquidity needs in an emergency or in a default event. At the same time, the FDF should draw up proposals on how incentive systems for systemically important banks could be better anchored in terms of global resolvability.
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