International strategy – national implementation

Switzerland has revised its acts and ordinances to create a legal basis for implementing international proposals on the recovery and resolution of global banks.

FINMA plays an active role in discussions with international bodies on the recovery and resolution of global, systemically important financial institutions and influences their outcome as far as possible. An effective, credible and internationally recognised strategy is the only way to prevent individual parts of companies from being protected or "ring-fenced" at the national level as a preventive measure. Ring-fencing of specific group units should be avoided because it can result in the premature collapse of the entire financial group. If the supervisory authority in the country in which an internationally active group of banks or institutions is domiciled (its home regulator) does not take responsibility for the entire group, the survival or at least the orderly resolution of its foreign group units, is not guaranteed.

Early amendments to Swiss supervisory law

Switzerland began revising its supervisory law as early as 2008, anticipating the proposals put forward by the Financial Stability Board (FSB) and passed by the G-20 for global systemically important financial institutions in 2011 by revising the Banking Act (BA), Banking Ordinance (BO) and Capital Adequacy Ordinance (CAO) and establishing a completely new FINMA Banking Insolvency Ordinance (BIO-FINMA).

Basis for recovery and resolution planning

The legislation mentioned above also provides a legal basis for institution-specific recovery and resolution planning (RRP). The aim of recovery and resolution planning is to identify risks to the stability of the financial system due to systemically important financial institutions and to find viable ways to deal with the impact of a crisis through the recovery or orderly resolution of the institutions concerned, thus preventing repercussions for systemic stability.