SNB and Finma back the new banking stability measures

The Swiss National Bank and the supervisory authority Finma have welcomed the banking regulation measures proposed by the Federal Council. Both institutions describe them as decisive for correcting the weaknesses in the regulatory framework exposed by the Credit Suisse crisis.

The proposal requires systemically important and medium-sized banks to prepare sufficient collateral so they can access central bank liquidity support. This is the point the SNB stresses most: for the central bank to provide liquidity in a crisis, banks must actually be able to transfer assets to it as collateral. In 2023 that preparation was missing, and the speed of intervention suffered as a result.

Early intervention and fines

The SNB also notes other measures favourably: the stabilisation plan and the resolvability of systemically important banks, Finma's options for early intervention, and cooperation between authorities in preventing and managing financial crises.

In the central bank's view these are essential measures, together with those already announced on 22 April, for improving the so-called too-big-to-fail rules and strengthening the resilience of the Swiss financial system.

For Finma the government's proposals are of central importance for the stability of banks and for the reputation of the Swiss financial centre. Among the measures directly concerning it, the authority cites the ability to communicate more actively in public about concluded proceedings, the introduction of a liability regime for senior managers, and the power to impose fines.

These three elements are the ones Finma has been asking to have strengthened for years. Today the authority can withdraw licences and impose conditions, but it cannot impose financial penalties nor, as a rule, publish the conclusions of its proceedings. A regime of individual accountability for senior managers would also shift part of the risk from the company to the people taking the decisions.

The package now goes to Parliament, where the banking sector has already voiced reservations about some components, particularly capital requirements. The issue is entangled with the so-called lex UBS, whose committee examination was postponed in recent weeks.