The competencies of FINMA in the area of recovery and resolution differ depending on the supervisory area. They include preventive supervision, intervention in acute crises and the resolution of solvent and insolvent companies. FINMA can initiate recovery and resolution measures at licensed and non-licensed institutions, at group holding and significant group companies of banking and insurance groups.
FINMA develops and maintains general intervention concepts to manage acute crises at financial market companies. It also manages and monitors complex reorganisation proceedings or – to the extent permitted by law – the restructuring of companies in acute difficulty. Restructuring proceedings may be undertaken for banks, securities dealers, mortgage bond institutions and financial market infrastructures. FINMA also has restructuring competencies in the insurance sector. On the other hand, restructuring is not allowed if an institution has already had its licence withdrawn or in the case of non-licensed companies also ineligible for retroactive authorisation.
Prevention and recovery are of particular significance to systemically important banks and financial market infrastructures as their failure would result in severe repercussions for the Swiss economy and financial system. These institutions are obliged to develop company-specific recovery and emergency plans. These plans are reviewed by FINMA. At the same time, FINMA develops resolution plans for systemically important companies and groups. The aim is to restructure the companies or, if necessary, wind them down in an orderly way on the basis of these plans and as part of national or international proceedings.
FINMA has published the information regarding its assessment of the emergency plans in its report entitled “Resolution Report 2020”. By publishing the report it has created transparency both for supervised institutions and the wider public about the current state of emergency planning and resolution strategies for systemically important banks. The report discusses the Swiss TBTF rules, FINMA’s role in the event of resolution, the primary resolution strategies of systemically important banks and the state of recovery and resolution planning for financial market infrastructures and insurance companies.
Protective measures are precautionary in nature and can be ordered by FINMA separately or in combination with restructuring or prior to possible (bankruptcy) liquidation proceedings. The objective is to safeguard the interests of creditors, ensure equal treatment of creditors as set out in the applicable order of priority, and enable at-risk companies to continue to perform activities subject to licence. Protective measures can be imposed on banks, securities dealers, central mortgage bond institutions, financial market infrastructures and insurance companies. In the case of banks and financial market infrastructures, measures can be imposed where concerns are justified that the institution is over-indebted, has serious liquidity problems or if it does not fulfil the capital adequacy requirements after the expiry of a deadline set by FINMA. In the case of insurance companies, FINMA may impose protective measures if the interests of policyholders are jeopardised.
FINMA can impose bankruptcy proceedings in almost all supervisory areas, if there is cause for bankruptcy and no prospect of restructuring an institution or if an attempt to do so has already failed. FINMA withdraws a supervised institution’s licence. For institutions operating without the required licence FINMA directly initiates (bankruptcy) liquidation proceedings.. Depositors, policyholders, investors in collective investment schemes and in Swiss Pfandbriefe are protected by the following special regulations:
FINMA is also responsible for recovery and resolution measures for group parent companies and significant group companies in the banking, financial market infrastructure and insurance sectors. Where group parent companies and significant group companies that are part of banking and financial market infrastructure are concerned, the imposition of protective measures and the performance of restructuring and bankruptcy proceedings are essentially governed by insolvency law provisions for banks and financial market infrastructures. Where significant companies of supervised insurance groups and conglomerates are concerned, the bankruptcy law provisions for insurance companies apply.
FINMA regularly employs agents when conducting restructuring, liquidation and bankruptcy proceedings. FINMA only assumes these duties if there are compelling reasons for doing so. This enables FINMA to focus on the coordination and monitoring of the proceedings plus its role as the responsible body instead of the bankruptcy and debt-restructuring cantonal courts.
To inform creditors, FINMA publishes notices of restructuring and bankruptcy proceedings and orderly liquidations it has initiated and supervised. FINMA also publishes lists with the names of significant group companies and conglomerates:
FINMA reserves the right to keep lists of other significant group companies at any time.