Focus on domestic systemically important banks

PostFinance, Raiffeisen and Zürcher Kantonalbank continue to have credible resolution strategies. However, none of the three banks has reserved sufficient capital to enable them to be recapitalised and continue operations in the event of a crisis. Thus the emergency plans of the domestic systemically important banks are still not ready to implement, in spite of the expiry of the deadline for achieving this.

Under the Swiss “too big to fail” (TBTF) regime, the domestic systemically important banks are required to produce emergency plans that are ready to implement within three years of being designated as systemically important. This original deadline expired for PostFinance in 2018, Raiffeisen in 2017 and Zürcher Kantonalbank (ZKB) in 2016. FINMA granted the banks extensions to the deadline which have also now expired by the cut-off date for this report in December 2021.

All three banks have presented plausible plans for how they will completely close the gaps in their gone concern capital over the coming years. Under the Capital Adequacy Ordinance they are required to do so by 2026 at the latest. Raiffeisen and ZKB already have sufficient free Tier 1 capital to meet the emergency plan requirements, but so far neither bank has transferred the required amount into the gone concern capital reserved for emergencies. Raiffeisen intends to build up the required gone concern capital by means of Tier 1 capital and bail-in bonds. ZKB plans to eliminate its shortfall of gone concern capital by issuing bail-in instruments that comply with the provisions in the revised Banking Act. Meanwhile PostFinance’s plan to build up its recapitalisation funds depends to a large degree on the ongoing revision of the Post Organisation Act and the proposed recapitalisation guarantee by the federal government.

The domestic systemically important banks have made progress in other areas of emergency planning. All three banks also meet the special liquidity requirements defined by FINMA for a credible emergency plan.

Below we discuss the implementation status of the emergency plans and resolution strategies of PostFinance, Raiffeisen and ZKB.


In January 2021 the Federal Council proposed that the Swiss Confederation, in its role as the indirect owner of PostFinance, should temporarily provide funding to cover the capital shortfall in the event of a resolution. The proposed recapitalisation guarantee for the gone concern capital required by PostFinance would be capped and time-limited and remunerated by Swiss Post on market terms. The legal basis is to be created in the course of the ongoing revision of the Post Organisation Act (POA). In the context of the POA revision, a commission of experts has also been appointed with the task of proposing principles for the upcoming political debate about Swiss Post’s basic service obligations in postal and payment services. A possible change in the basic service obligation for payment services could have an impact on PostFinance’s alternative resolution strategy, which is still inadequate at present.

On the basis of the planned guarantee by the federal government and the additional gone concern capital to be built up by the bank, PostFinance also has a plausible resolution strategy. However, until the gone concern capital is available in full and the federal government’s recapitalisation guarantee is in place, the emergency plan is not ready to implement. The emergency plan also needs to be improved in the categories of operational interdependencies and the alternative resolution strategy.


Raiffeisen Group’s primary resolution strategy to recapitalise and continue operating is influenced by its unique cooperative structure. In the absence of additional measures, FINMA would have to restructure over 200 independent Raiffeisen banks separately if the group was at risk of insolvency. To avoid this, FINMA has powers to merge the Raiffeisen banks into a resolution entity in the event of a crisis and resolve the whole group in a single procedure. If losses are to be imposed on bondholders via a bail-in, the merged resolution entity could additionally be converted into another legal structure. FINMA’s current powers in this regard are to be explicitly inserted into the Banking Act.

Raiffeisen has improved its emergency plan in the categories of operational interdependencies and the alternative resolution strategy. The shortfall to fulfilling the emergency plan capital requirements was further reduced with the bail-in bond issues in 2020 and 2021. The emergency plan will not be ready to implement until the gone concern capital is available in full.

Zürcher Kantonalbank

At Zürcher Kantonalbank (ZKB), the canton of Zurich is sole proprietor and liable for all of the bank’s non-subordinated liabilities if the bank’s own resources are insufficient. The canton would therefore be the primary source of funds to recapitalise the bank in a crisis. The emergency plan determines the level of funds required to adequately recapitalise ZKB if the bank was facing a crisis. In order for the emergency plan to be ready to implement, ZKB must set aside at least half of these funds in advance using the capital instruments stipulated in the Capital Adequacy Ordinance. The endowment capital reserves and a Tier 2 bond are currently eligible as additional loss-absorbing funds.

These instruments fall short of the gone concern capital requirements for a recapitalisation and therefore the emergency plan has not been approved as ready to implement yet. The ongoing revision of the Banking Act creates the legal basis for cantonal banks with a public guarantee to issue bail-in debt instruments. ZKB plans to bridge the shortfall of gone concern capital by issuing these instruments.