Switzerland's Federal Council has set the parameters for amendments to the too big to fail framework for systemically important banks following the Credit Suisse crisis review and has opened an initial consultation on measures that can be implemented directly at ordinance level. The reform package spans legislative and ordinance changes, intended to reduce risks for the state, taxpayers and the economy, with consultations to be launched in stages from autumn 2025. At legislative level, the package includes a senior managers regime requiring banks to document responsibility for decisions to enable targeted sanctions in cases of misconduct, including remuneration clawbacks and restrictions by the Swiss Financial Market Supervisory Authority (FINMA). It also proposes requiring systemically important banks to fully deduct the carrying value of foreign subsidiaries from the Swiss parent bank’s Common Equity Tier 1 (CET1) capital, alongside tighter recovery and resolution planning expectations and expanded resolution options. Measures would also increase the ability to obtain liquidity via the Swiss National Bank (SNB) through legal simplifications for posting collateral and new ordinance requirements for banks to pre-position collateral, including a quantitative minimum requirement for systemically important banks. FINMA’s toolkit would be broadened to allow earlier and more effective intervention and the issuance of pecuniary administrative sanctions (fines). For ordinance-level changes already put out to consultation, the Federal Council proposes stricter capital provisions on assets considered insufficiently recoverable in a crisis, more detailed rules on the duration and interest-payment suspension of Additional Tier 1 (AT1) instruments, and enhanced liquidity reporting to ensure prompt provision of complete, up-to-date information and scenario analyses. Consultation drafts for legislative amendments are due in the second half of 2025 for the capital backing measure on foreign subsidiaries and in the first half of 2026 for the remaining measures, with longer transitional periods planned for higher capital requirements. A separate consultation on amendments to the Liquidity Ordinance is planned for the first half of 2026 to implement the new quantitative minimum requirement for obtaining liquidity via the SNB and other central banks, while the ongoing ordinance-level consultation runs until 29 September 2025 and the related measures would enter into force in January 2027 at the earliest.
Federal Department of Finance (Switzerland) 2025-06-06
Switzerland's Federal Council sets parameters and opens consultations for a tougher too big to fail regime including stricter capital treatment of foreign subsidiaries and expanded FINMA powers
Switzerland's Federal Council has initiated amendments to the too big to fail framework for systemically important banks, following the Credit Suisse crisis review. The reform package includes legislative and ordinance changes to mitigate risks to the state and economy, with consultations starting in autumn 2025. Key proposals involve a senior managers regime, stricter capital provisions, enhanced liquidity reporting, and expanded FINMA powers.