Featured Product

    FINMA Assesses Recovery and Emergency Plans of Large Swiss Banks

    February 25, 2020

    FINMA published a report that provides detailed assessment of the recovery and resolution plans of the systemically important Swiss institutions. FINMA has approved the recovery plans of all five systemically important Swiss banks. In addition, the two large Swiss banks were required to produce effective emergency plans for their Swiss operations by the end of 2019. FINMA views the Swiss emergency plans of Credit Suisse and UBS as effective and approves them. However, the emergency plans of the three domestic systemically important banks—PostFinance, Raiffeisen, and Zürcher Kantonalbank—do not meet the statutory requirements yet.

    Following the financial crisis of 2007-2008, FINMA promulgated special rules for the stabilization, restructuring, or liquidation of troubled institutions. The rules require higher capital and liquidity buffers as well as plans for recovery and resolution. There are four main instruments in this context:

    • Recovery plan. The systemically important bank or financial market infrastructure sets out how it would stabilize itself in a crisis. This plan requires the approval of FINMA.
    • Swiss emergency plan. In this plan, a systemically important bank details how it would ensure uninterrupted continuity of its systemically important functions in Switzerland (particularly access to deposits and payments) in crisis. FINMA must review this plan and evaluate whether it is ready to be implemented if necessary.
    • Resolution plan. FINMA produces a global resolution plan for Credit Suisse and UBS. This indicates how the entire global group would be recapitalized, restructured, and/or (partially) liquidated in a crisis. Resolution plans are also required for the domestic systemically important banks and systemic financial market infrastructures. FINMA assesses the resolvability of an institution on the basis of whether the preparations of the institution are sufficient to successfully implement the plan if necessary.
    • Rebates. FINMA can grant UBS and Credit Suisse rebates on certain components of the capital requirements if they have made significant improvements in their global resolvability. In 2019, Credit Suisse and UBS utilized 40% and 42.5% of their maximum rebate potential, respectively.

    FINMA regards the emergency plan of Credit Suisse to be effective. UBS has been also judged by FINMA to have met the requirements for an effective emergency plan, with the qualification that certain joint and several liabilities remain excessive. The three domestic systemically important banks also submitted an emergency plan, but were at different stages of implementation at the end of 2019. None of the plans has been deemed to be effective yet. At Zürcher Kantonalbank, there is a plausible plan for how the capital and liquidity resources required in the event of a crisis can be built up further. Raiffeisen and PostFinance do not yet have plausible plans for accumulating the necessary gone-concern funds for recapitalization in a crisis. All three domestic banks have work underway to develop an effective emergency plan. The domestic systemically important banks have little or no foreign business and their resolution plans relate solely to the systemically important functions in Switzerland. They are, therefore, largely interchangeable with the emergency plans.

    FINMA is, however, required to draw up a global resolution plan for the global systemically important banks: Credit Suisse and UBS. Unlike the emergency plan, which relates purely to the systemically important functions of banks in Switzerland, this global resolution plan covers the entire banking group worldwide. FINMA concluded that both the banks already took important preparatory steps and made considerable progress with respect to their global resolvability. FINMA believes the requirements for structural disentanglement are now fulfilled. For instance, the two banks created holding structures and Swiss subsidiaries to facilitate this disentanglement. In other areas, particularly with regard to funding in resolution, further implementation work still needs to be done. 

     

    Related Links

    Keywords: Europe, Switzerland, Banking, Too-Big-To-Fail, Rebates, Recovery and Resolution, G-SIBs, D-SIBs, Systemic Risk, Resolution Framework, FINMA

    Featured Experts
    Related Articles
    News

    EBA Publishes Final Regulatory Standards on STS Securitizations

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.

    September 20, 2022 WebPage Regulatory News
    News

    ECB Further Reviews Costs and Benefits Associated with IReF

    The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.

    September 15, 2022 WebPage Regulatory News
    News

    EBA Publishes Funding Plans Report, Receives EMAS Certification

    The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).

    September 15, 2022 WebPage Regulatory News
    News

    MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures

    The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.

    September 15, 2022 WebPage Regulatory News
    News

    BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules

    The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.

    September 15, 2022 WebPage Regulatory News
    News

    IOSCO Welcomes Work on Sustainability-Related Corporate Reporting

    The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)

    September 15, 2022 WebPage Regulatory News
    News

    BoE Allows One-Day Delay in Statistical Data Submissions by Banks

    The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.

    September 14, 2022 WebPage Regulatory News
    News

    ACPR Amends Reporting Module Timelines Under EBA Framework 3.2

    The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.

    September 14, 2022 WebPage Regulatory News
    News

    ECB Paper Discusses Disclosure of Climate Risks by Credit Agencies

    The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)

    September 13, 2022 WebPage Regulatory News
    News

    APRA to Modernize Prudential Architecture, Reduces Liquidity Facility

    The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.

    September 12, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8514