Featured Product

    Swiss Federal Council Consults to Amend Capital Adequacy Ordinance

    April 05, 2019

    The Federal Council of Switzerland is consulting on an amendment to the Capital Adequacy Ordinance. The proposal concerns three separate topics: the Federal Department of Finance (FDF) wishes to simplify the requirements for certain small banks and securities firms, to adjust the risk-weights for domestic residential investment property with a high loan-to-value ratio, and to ensure that the parent banks of systemically important banks are sufficiently well-capitalized in the event of a crisis. The consultation will run until July 12, 2019.

    The rationale and details for the proposed amendments follow: 

    • Switzerland has implemented the international standards put in place post crisis due to which the national regulation has become more complex and can place a particularly heavy burden on small institutions. Therefore, the Federal Council intends to ease the burden on small, particularly liquid and well-capitalized banks and securities firms with simplified requirements for calculating the capital requirements.
    • In Switzerland, nearly 30% of mortgages are used to finance residential investment property. Price corrections for these properties, as well as rising interest rates, can lead to considerable losses for banks. To increase their resilience, banks should thus use additional capital to underpin mortgages on domestic residential investment property with a high loan-to-value ratio. This measure also applies to mortgages granted by insurance companies. The FDF will ask the Federal Council to give preference to self-regulation in the area of residential investment property, provided that banks quickly offer their support for at least an equally effective strengthening of the existing self-regulation approved by FINMA.
    • Gone-concern requirements are intended to ensure that a systemically important bank in difficulty can be restructured and wound up in an orderly manner without financial assistance from the state. The Federal Council introduced gone-concern requirements at group level for UBS and Credit Suisse back in 2016. Gone-concern requirements have also been in force to a reduced extent for domestically focused systemically important banks (PostFinance AG, Raiffeisen, and Zürcher Kantonalbank) since January 01, 2019. In keeping with an international standard by FSB, the current proposal is intended to ensure that sufficient capital is available in the event of a crisis, particularly in parent banks and in the Swiss units that perform systemically important functions.


    Related Link: Press Release and Related Documents

    Comment Due Date: July 12, 2019

    Keywords: Europe, Switzerland, Banking, Capital Adequacy Ordinance, Capital Requirements, Proportionality, LTV, Residential Real Estate, D-SIBs, Systemic Risk, Swiss Federal Council

    Featured Experts
    Related Articles
    News

    BIS Quarterly Review Discusses Developments in Fintech and ESG Space

    BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.

    September 20, 2021 WebPage Regulatory News
    News

    BCBS to Consult on Supervisory Practices for Climate Risks by Year-End

    The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards

    September 20, 2021 WebPage Regulatory News
    News

    OCC Identifies Operational Risk Deficiencies in MUFG Union Bank

    The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.

    September 20, 2021 WebPage Regulatory News
    News

    EC Rule on Contractual Recognition of Write Down and Conversion Powers

    The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.

    September 17, 2021 WebPage Regulatory News
    News

    ECB to Consider Climate Risks When Reviewing Collateral Framework

    In a response to the questions posed by a member of the European Parliament, the President Christine Lagarde highlighted the commitment of the European Central Bank (ECB) to an ambitious climate-related action plan along with a roadmap, which was published in July 2021.

    September 17, 2021 WebPage Regulatory News
    News

    SRB Provides Update on Approach to Prior Permissions Regime

    The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.

    September 16, 2021 WebPage Regulatory News
    News

    APRA Issues Further Guidance on Application of Securitization Standard

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.

    September 16, 2021 WebPage Regulatory News
    News

    ACPR Publishes Corrective Version of RUBA Taxonomy

    The French Prudential Control and Resolution Authority (ACPR) published the corrective version of the RUBA taxonomy Version 1.0.1, which will come into force from the decree of January 31, 2022.

    September 15, 2021 WebPage Regulatory News
    News

    Nordea Bank and EIB Sign Agreement to Fund Green Projects in Nordics

    The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.

    September 15, 2021 WebPage Regulatory News
    News

    APRA Publishes FAQs on Capital Treatment of Overseas Subsidiaries

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.

    September 15, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7487