Finma greenlights ZKB and other bank emergency strategy’s while Postfinance works on meeting requirements.

The Swiss Financial Market Supervisory Authority: FINMA has scrutinised the emergency and stabilisation plans of domestically oriented systemically important banks.

With stress tests on mortgages, interest rates and a loss potential evaluations, Zürcher Kantonalbank (ZKB) was found on Tuesday to be up to Finma standards. While much of the methodology and specifics are not public, this should be a boost in confidence for ZKB customers. The first of systemically important banks to pass the new regulatory checks.

ZKB issued the additional loss-absorbing funds required for this in the form of loss-bearing bonds in 2023, according to the press release. The other requirements had already been met.

Postfinance’s emergency plan on the other hand have still not met the requirements of FINMA. FINMA claim the bank does not have the loss-absorbing funds necessary for stability under crisis, Postfinance have now submitted plans on how they will build this pool of security funds.

The assessment of Raiffeisen’s emergency plan remains unchanged. FINMA assessed it as feasible for the first time last year.

UBS Not Assessed Yet

UBS has not yet been assessed. It will revise its crisis preparedness due to the takeover and integration of Credit Suisse. It will then submit its planning for restructuring and liquidation as well as its stabilisation and emergency planning to FINMA for review.

Systemically important banks must submit an annual emergency plan to FINMA for assessment.

In this plan, they must show how the systemically important functions can be continued if there is a risk of insolvency. Systemically important functions at Raiffeisen and ZKB are the short-term lending business and at all three banks – i.e. including Postfinance – the deposit business and payment transactions.

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