Swiss regulator reviews crisis plans

On Wednesday, Swiss financial regulator FINMA declared that the recovery and resolution plans of two of Switzerland’s five important banks are insufficient. The regulator raised concerns about the ability of Zuercher Kantonalbank (ZKB) and PostFinance to continue their operations during a crisis. FINMA said that ZKB has not yet met the required capital in full, and PostFinance must align its emergency planning.

FINMA released an assessment of Switzerland’s main banks’ emergency plans, which do not account for Credit Suisse’s merger with UBS. The financial regulator praised Credit Suisse’s crisis plan developed last year, stating that the bank had an emergency plan ready for implementation. However, Credit Suisse last month had to be rescued by UBS in a takeover orchestrated by Swiss authorities.

FINMA’s CEO, Urban Angehrn, said, “It is clear that there are important lessons to be learned from the Credit Suisse crisis for future crisis preparations.” Following the takeover of Credit Suisse, the regulator had denied responsibility for the fiasco at the country’s second-biggest bank, stating that it had acted promptly, while calling for more authority to hold lenders accountable.

In Switzerland, banks classified as systematically important are subject to additional regulation and supervision. FINMA monitors these banks’ recovery and resolution plans to ensure that they can continue operating during a crisis. The recovery plans outline how the bank can recover from a crisis, while the resolution plans describe how the bank can be wound down if it becomes insolvent.