The Solvency and Capital section focuses on assessing and analysing the adequacy of capital and liquidity at individual institutions, the structure of and dependencies within groups of institutions and large-scale capital transactions. This involves testing against various crisis scenarios. In particular, the analysts investigate the extent of stability in the event of insolvency and the possibility of continuing individual financial services irrespective of the continued existence of the individual institution or group of institutions.
As such, the section fulfils FINMA's role as insolvency authority. FINMA is responsible both for commencing and conducting restructuring and bankruptcy proceedings in relation to individuals and legal entities carrying on business as a bank or as a securities dealer, for which a licence is required. It can also instigate advance or simultaneous measures to protect investors. It also has a right to participate in insolvency proceedings relating to insurance companies and the bankruptcy court is bound to take this right into account. Where FINMA is responsible for commencing bankruptcy or restructuring proceedings, it does not merely perform the function of judge and supervisory authority in relation to the appointed liquidators, committees of creditors and restructuring agents, but discharges the duty of insolvency administrator as well. In addition, bank depositors, investors in relation to securities dealers and policyholders of insolvent insurance companies benefit from special protection provisions (see also:
Investor protection and
Tied assets).
As is the case with bankruptcy proceedings falling within FINMA's remit, the proceedings required for the restructuring of banks and securities dealers are distinct and separate and geared to the specific needs of the financial sector. The purpose of restructuring is to enable ailing financial institutions to continue in business or to ensure that specific services can still be provided. However, restructuring proceedings are not available if a licence has already been revoked or it is not possible to grant a retrospective licence to entities engaging in unauthorised activity.