19/03/21

SWITZERLAND: Regulator Sees Gaps in Major Financial Firms.

As published on finews.com, Friday 19 March, 2021.

Switzerland's systemically relevant finance firms have credible too-big-to-fail plans, but some gaps remain according to financial regulator Finma.

The six Swiss too-big-to-fail institutions – UBS, Credit Suisse, Zurich's cantonal bank ZKB, Raiffeisen, Postfinance, and part of exchange operator SIX – have credible resolution strategies in case of a meltdown, Bern-based Finma said in a statement on Friday following its annual assessment.

Specifically, PostFinance, Raiffeisen, and ZKB have vastly improved emergency planning: «For the first time they all have a credible resolution strategy,» Finma said. However, it called for further work to build buffers to absorb crisis losses. Finma wants Postfinance, which the government wants to privatize, to develop an alternative strategy.

Finma said emergency planning by UBS and Credit Suisse – which are so-called G-SIBs or globally systemically important – is effective. UBS' approval remains conditional on the Swiss bank continuing to unwind internal financial interdependencies on a schedule agree with the regulator, Finma said, without detailing.

SIX, relevant as the backbone of Switzerland's financial market infrastructure, did less well, missing Finma's requirements for approval. The regulator said it laid out its preferred resolution strategy for SIX's Xclear, which is a central counterparty. This includes temporarily continuing so-called system-critical functions during a complete wind-down.