Systemically important banks and FINMA both involved in recovery, emergency and resolution planning

Systemically important banks are responsible for creating their own recovery and emergency plans. FINMA is responsible for the resolution plan. Systemically important banks must provide FINMA with the information required for that purpose.

Each systemically important bank is responsible for creating the recovery plan, which must define the measures to be taken to retain sufficient sustainable stability in the event of a crisis to continue operations without government intervention. The recovery plan is subject to approval by FINMA.

Systemically important banks formulate the recovery and ermergency plan

The systemically important banks also formulate the emergency plan, which must demonstrate and prove how the bank could continue its systemically important functions uninterrupted in the event of a crisis. The burden of proof in this instance is high. FINMA reviews the emergency plan in terms of the viability of its prescribed measures. The bank must implement the emergency plan measures in preparation as far as possible, for example by outsourcing the systemically important functions of a financial group to a separate banking subsidiary.

Systemically important banks must make adequate provisions to ensure they can maintain the services required for continuing their systemically important functions in the event of a crisis and during the subsequent restructuring phase. The measures to improve operational continuity in resolution vary according to the type of service model used by the systemically important bank or banking group: use of services by intra-group companies, third parties, business areas within the bank or a combination thereof. Some systemically important banks have created service companies within their group as a preparatory measure.

FINMA formulates the resolution plan

FINMA formulates the resolution plan, which outlines the procedure for the restructuring or liquidation of a systemically important bank, as decreed by FINMA. Systemically important banks must submit to FINMA the information it needs to create the resolution plan. FINMA can disclose the resolution plan to the institution, but it is not obliged to do so. FINMA is only bound by the resolution plan to the extent prescribed by law and it may deviate in practice from its strategies and measures.

Regular updates

Systemically important banks must submit a current recovery and emergency plan to FINMA every year for review. They must also submit a revised plan if changes necessitate plan amendments or if requested by FINMA. FINMA will approve the recovery plan, provided it meets the legal requirements.