Supervision of banks and securities dealers
The SFBC’s oldest task is the supervision of banks for which it has been responsible since 1934. Since February 1, 1997 its remit has also included the supervision of securities dealers. The core objectives of the Banking Act and Banking Ordinance and the Stock-Exchange Act and Ordinance are to assure the solvency of financial institutions in the interests of all their creditors or investors and to prevent deposits from the public being accepted on an unauthorised basis. If an institution finds itself in trouble, the legislation in place guarantees an efficient corporate reorganisation or liquidation.
The supervision of banks and securities dealers, however, is also designed to contribute to the stability of the banking system to maintain public confidence in the system, and to bolster the good reputation of the Swiss financial marketplace. The SFBC serves this aim by providing appropriate support in combating criminality as well as intervening against unlawful takeover bids.
All banks and securities dealers, irrespective of their legal form, are subject to the supervision of the SFBC. In a narrower sense, a bank is defined as a company which accepts deposits from the public on a professional basis or which solicits such deposits publicly in order to finance in any manner whatsoever, on its own account, an unlimited number of persons and enterprises outside its own economic unit. The definition also embraces larger financial intermediaries which draw a significant share of their funds from several banks that have no controlling interest in them and, on the assets side, carry out the same activity as banks within the narrower sense.
Institutions falling outside the scope of the Banking Act are, in principle, prohibited from accepting deposits from the public. However, the issuance of debenture bonds is expressly exempted from the definition of accepting deposits from the public and thus remains open as a financing instrument for commercial and industrial enterprises.
Every bank or securities dealer must obtain a license from the SFBC before it can open for business. The SFBC will order the liquidation of any unlicensed enterprise conducting business unless the conditions for an exceptional belated granting of a license can be met.
The obligation to obtain a license and comply at all times with the associated conditions constitutes the most important preventive measure in the supervisory system for banks and securities dealers. All by-laws and business rules must be approved by the SFBC. Persons entrusted with the administration and management of the bank, as well as those holding a qualifying shareholding, must provide guarantees that business will be conducted in a proper manner. The Banking and Stock-Exchange Acts and Ordinances contain provisions concerning capital adequacy, diversification of risks and liquidity with the objective of maintaining financial stability. Detailed financial reporting requirements are also in place to enhance transparency.
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