More than ten years after the global financial crisis, Finma says resolution planning by «too-big-to-fail» institutions is on track, yet gaps remain.
In its annual assessment of the progress systemically important Swiss financial institutions, «too-big-to-fail», are making on crisis planning, the Swiss Financial Market Supervisory Authority (Finma) said there is more work to be done before it can be deemed completed.
Swiss financial institutions deemed systemically important, have to demonstrate in their recovery and resolution planning how they would stabilize themselves in a crisis. In the case that they need to be restructured or liquidated, they have to maintain their Swiss systemically important functions.
Not Ready
The emergency plans of PostFinance, Raiffeisen and Zuercher Kantonalbank (ZKB) are still not ready to be implemented. None of the institutions have sufficient loss-absorbing funds for them to be recapitalized to continue operations in a crisis, Finma said.
While Raiffeisen and ZKB have sufficient Tier 1 capital to meet emergency requirements, neither bank has reallocated the funds to the reserves for emergencies. PostFinance's plans, on the other hand, are dependent on the Post Organization Act which is currently being revised and the planned guarantee of recapitalization by the federal government.
Large Banks
Both UBS and Credit Suisse made progress on resolvability plans, thereby reducing obstacles to the implementation of a resolution strategy, with Finma approving the recovery plans of both. Furthermore, Finma deems their Swiss emergency plans to be «effective.»
Source: Finma
