The Federal Council of Switzerland adopted amendments to the Capital Adequacy Ordinance. The amendments introduce simplifications in the capital and liquidity requirements for certain small banks and securities firms and will ensure that the parent entities of systemically important banks are sufficiently well-capitalized in the event of a crisis. The amendments become effective from January 01, 2020.
The amendments to the Ordinance simplify the capital and liquidity requirements for small, particularly liquid and well-capitalized Category 4 and Category 5 banks and securities firm. Furthermore, the changes aim to ensure the availability of sufficient gone-concern capital, particularly for parent banks and in the Swiss units that perform systemically important functions. 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 had already introduced gone-concern capital requirements for UBS and Credit Suisse at consolidated group level in 2016. Since January 01, 2019, such requirements have also been in force to a reduced extent for the domestically focused systemically important banks (PostFinance AG, Raiffeisen, and Zürcher Kantonalbank).
Additionally, the Swiss Federal Council has decided not to implement the proposed increase in capital requirements for mortgages on residential investment property, as it considers the proposed self-regulation regime of the Swiss Bankers Association to be effective and appropriate.
Keywords: Europe, Switzerland, Banking, Securities, Own Funds, Capital Adequacy Ordinance, Gone-Concern Capital, Small Banks, Resolution Framework, Systemic Risk, Proportionality, Swiss Federal Council
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Previous ArticleCBO Releases Financial Stability Report for 2019
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.
The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.
The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.
Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)
The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)