The measure is designed to prevent banks from having to increase their capital and restrict their lending activities during a downturn, thereby exacerbating cyclical fluctuations. The FSB ranks Credit Suisse Group AG and UBS AG as global systemically important banks (G-SIBs). In Switzerland, the Banking Act gives the SNB the authority to designate banks as being systemically important for the Swiss market, following consultation with FINMA. Banks are deemed to be systemically important if they perform functions in the domestic lending and deposit-taking business, as well as in the payment transactions area, which are essential to the Swiss economy and cannot be substituted at short notice. In addition to Credit Suisse Group AG and UBS AG, the SNB has designated Zürcher Kantonalbank, the Raiffeisen Group and PostFinance Ltd as systemically important. These are referred to as gone-concern requirements. A fundamental distinction is drawn between going-concern and gone-concern requirements. The former address the ongoing business activities of a bank, whereas the latter relate to the event of a bank having to be restructured or wound down. The fact is that banks typically get into difficulty precisely when they no longer have sufficient capital available. The regulations therefore allow for debt to be written off or converted into equity in such instances. Such instruments, which are designed to absorb losses in the event of a resolution, are referred to as bail-in instruments. Page 5/8  Banking regulation in Switzerland  With these two packages of measures, the international bodies have defined global minimum standards.
Switzerland refrains from actively intervening in the business models or organisational structures of the banks, and no distinction is drawn between desirable and undesirable banking practices. Our regulation focuses on the essentials, specifically on ensuring that banks can themselves absorb any losses resulting from the risks they take on, without destabilising other parts of the financial system or damaging the economy. Taking stock  What have we achieved with the measures that have been put in place? Is the Swiss banking system more resilient to crises today? Please allow me to give you our take on this. I will first look at those banks with a domestic focus before moving on to the big banks. Switzerland’s domestically focused banks were not at the centre of the financial crisis, and all in all the new regulations are also likely to have little effect on them; their liquidity and capital buffers are mostly well above the regulatory minimum requirements. The stress tests that the SNB regularly conducts to assess risks also show that the banking system is largely well capitalised. Notwithstanding this, the risk appetite of domestically focused banks has increased again in recent years, not least due to the low interest rate environment. There are also imbalances on  Page 6/8  the mortgage and real estate markets. It is therefore important that the domestically focused banks are aware of the risks they have assumed and ensure that they remain well capitalised in the future. And what about the two big banks?