• wblogo
  • wblogo
  • wblogo

FINMA detects progress in recovery and resolution planning

Chris Hamblin, Editor, London, 24 March 2021

articleimage

The Swiss Financial Market Supervisory Authority has published its annual assessment of recovery and resolution planning by the systemically important Swiss financial institutions - notably Credit Suisse, UBS and Raiffeisen - but there are still gaps.

The Swiss Financial Market Supervisory Authority has published its annual assessment of recovery and resolution planning by the systemically important Swiss financial institutions - notably Credit Suisse, UBS and Raiffeisen - but there are still gaps.

The term 'recovery' refers to the way in which a bank stabilises itself in a crisis. The word 'resolution' refers to the way in which it fails. Most regulators are trying to ensure that, if and when a bank fails, it can be restructured or liquidated in an orderly way.

For the first time, all domestic systemically important banks (PostFinance, Raiffeisen and Zürcher Kantonalbank) have credible resolution strategies in FINMA's eyes. The two large banks (Credit Suisse and UBS) have improved their "global resolvability" in the last year.

Systemically important Swiss financial institutions are obliged to show FINMA their recovery and resolution plans.

FINMA continues to regard the Swiss emergency plans of the global systemically important banks UBS and Credit Suisse as effective, although UBS still needs to reduce certain financial interdependencies within the group according to an agreed schedule. FINMA and the Swiss Government have still not come up with enough tasks for the banks to fulfil in the area of liquidity.

State of play at the end of 2020

FINMA has approved the recovery plans of Credit Suisse, UBS, PostFinance, Raiffeisen and Zürcher Kantonalbank. Work is not yet complete at SIX x-clear and SIX SIS. FINMA thinks that the Swiss emergency plans of Credit Suisse and UBS are effective, which those of PostFinance, Raiffeisen and Zürcher Kantonalbank are "plausible for reaching effectiveness." On the subject of "resolveability," the preparatory measures of Credit Suisse and UBS are not yet adequate. Credit Suisse's rebate for "gone concern" capital requirements was 45% of the maximum potential rebate; UBSs' was 47.5%.

Latest Comment and Analysis

Latest News