As you know, it can pursue two courses of action. The first, aimed at facilitating mergers of viable institutions, focuses on improving their efficiency in the medium term, strengthening the solvency of the post-merger institution and promoting a reduction of capacity. Thus, for example, the merger plans approved within the framework of the FROB envisage cuts of approximately 20% in the number of offices. The aid given is conditional, since the institutions have to comply with a plan previously approved by the Banco de España; it is temporary, because the funds provided in the form of preference shares will have to be returned within five years; and it involves a cost, because these funds bear interest at 7.75%. The second course of action open to the FROB is designed to achieve a swift and efficient resolution of the institutions which have not been able to overcome their difficulties and are no longer viable. If it is necessary for the Banco de España to take control of an institution and to replace its directors, the FROB contributes financial resources and ability to act. To date, this second form of action has only had to be used at CajaSur. Consequently, the FROB has predominantly used the first course of action. Eight mergers have been approved and € billion in government assistance have been requested. The request yet to be made by Banca Cívica will be for an estimated further € billion. Additionally, there are another five mergers under way which have not involved a request for assistance.
This task complements those performed by the Swiss Federal Banking Commission (SFBC), which oversees the individual banks (microprudential oversight). The Financial Stability Report takes account of this division of tasks. The National Bank limits its evaluation of the Swiss banking sector’s stability by focusing on trends observable at the levels of the banking system, the financial markets and the macroeconomic environment. It only focuses on individual banks when this is necessary in order to make an overall assessment. The main purpose of the Financial Stability Report is to allow the National Bank to highlight any stresses or imbalances that could pose an immediate or longer-term threat to system stability. We evaluate the stability of the banking sector in two steps. First we analyse the development of the risk factors in the macroeconomic environment and on the financial markets. Then we evaluate the banking system’s robustness in the face of these risk factors. To do this, we consider profitability, the risks entered into and the capital adequacy of the banking sector. To complete our analysis, we use newly developed models that quantify both the stress to which the banking sector is subjected and its correlation with the macroeconomic environment. The main characteristics and conclusions drawn from these models are published for the first time today. The models will be presented in detail in a series of SNB publications. The analysis presented in the Financial Stability Report indicates that the banking sector is stable.