The Swiss Financial Market Supervisory Authority FINMA is proposing to amend several of its circulars to implement the small banking regime. The amendments relieve small and solid banks from certain prudential rules. This consultation ends on July 12, 2019 and the effective date for the regime is expected to be January 01, 2020.
As part of this consultation, FINMA proposed adjustments to its circulars on outsourcing for banks and insurers (Circular 18/3), operational risk for banks (Circular 08/21), corporate governance by banks (Circular 17/1), and disclosures by banks (Circular 16/1) on the basis of the Capital Adequacy Regulation. Amendments have also been proposed to the circulars on risk distributions for banks (Circular 19/1) and credit risk for banks (Circular 17/7). The facilitation of the small banking regime in the areas of outsourcing and operational risks will in future also be applied to institutions with a fintech license. The consultation on the revised FINMA circulars will be conducted in parallel to the consultation on the adjustments to the own funds regulation.
To introduce the small-banking regime, the Federal Council's own funds ordinance must also be adjusted. To this end, the Federal Department of Finance has drafted a corresponding draft. The pilot operation of the small-banking regime launched in July 2018 and it enjoyed great interest, with 68 institutes in the categories 4 and 5 participating in it. These institutions are already benefiting from relief for the 2018 reporting year. FINMA will continue the pilot operation until the end of 2019. Thereafter, it is to be replaced by the definitive regime on January 01, 2020, based on the revised own funds regulation. The proposed regime is in terms of content and time in comparison with other financial centers.
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Comment Due Date: July 12, 2019
Effective Date: January 01, 2020
Keywords: Europe, Switzerland, Banking, Category 4, Category 5, Small Banks, Proportionality, capital Adequacy, Disclosures, Credit Risk, FINMA