November 21, 2018

Federal Council of Switzerland adopted an amendment to the Capital Adequacy Ordinance. Based on the amendment, the three domestically focused systemically important banks—PostFinance AG, Raiffeisen, and Zürcher Kantonalbank—will have to hold gone concern capital for their possible restructuring and resolution, from January 01, 2019.

Following the introduction of gone concern capital requirements for UBS and Credit Suisse back in 2016, these will now apply also to the domestically focused systemically important banks (PostFinance AG, Raiffeisen and Zürcher Kantonalbank). The level of the new requirements reflects the going concern capital requirements already in force, which ensure the continuation of business activities in the event of major losses. Unlike for the big banks, however, only 40% of the requirements are reflected, as the domestically focused banks are less interconnected internationally.

The revision of the Capital Adequacy Ordinance will provide the opportunity to adjust the provisions on the treatment of systemically important banks' stakes in their subsidiaries. The previous deduction from capital will be replaced with a risk-weighting. Moreover, group companies that provide services necessary for the continuation of a bank's business processes will now be subject to consolidated supervision by FINMA. In the first half of 2019, the Federal Council will decide which institutions within a financial group have to meet the requirements for systemically important banks and particularly how the gone concern capital requirements for the Swiss units of the big banks should be structured.


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Keywords: Europe, Switzerland, Banking, Gone Concern Capital, D-SIB, Capital Adequacy Ordinance, Orderly Resolution, Swiss Federal Council

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