The Swiss Bankers Association (SBA) has expressed concerns about the Federal Council's proposals to enhance banking stability, particularly in light of the Credit Suisse situation. The SBA emphasized the need for a comprehensive approach that preserves the competitiveness of Switzerland's financial sector while opposing additional powers for the Financial Market Supervisory Authority (Finma). The association also called for international coordination on capital adequacy regulations to maintain financial stability.
The SBA's concerns are in response to the Federal Council's report on the too-big-to-fail (TBTF) issue, which was published in April 2024. The SBA outlined four key areas of focus: the introduction of a Public Liquidity Backstop (PLB), strengthening legal foundations for remuneration systems, maintaining the dual supervisory model, and assessing the proposed measures' effects on the banking sector.
The SBA supports the introduction of the PLB as a necessary third line of defense for systemically important banks. However, they oppose banks being required to pay an "insurance premium" for this liquidity support and argue that the federal government should solely guarantee the repayment of funds lent to banks in crisis situations.
The SBA has raised concerns about the Federal Council's approach to regulation, suggesting that it has bundled too many unrelated issues into the report. They also question the effectiveness of additional fine powers proposed for Finma, considering Credit Suisse's previous penalties.
The SBA emphasizes the necessity of international coordination in capital adequacy regulations to maintain the competitiveness of Swiss banks. They advocate for a nuanced regulatory framework that considers the varying sizes and risk profiles of financial institutions.
The SBA believes that a meaningful discussion on TBTF legislation cannot occur until the report from the Parliamentary Commission of Inquiry (PUK) is available.
The SBA acknowledges the challenges posed by the integration of the PLB into the existing TBTF framework and suggests that its integration into ordinary law may be necessary to avoid regulatory chaos.
Despite recent events, the SBA remains committed to the principles of the TBTF framework and advocates for measures that ensure the resolvability of systemically important banks.
The SBA's positions reflect a desire for a balanced approach to regulation that safeguards stability while fostering a competitive environment for Swiss banks. Ongoing dialogue among stakeholders will be crucial in shaping the future of banking regulation in Switzerland.