“A worrying accumulation of powers within FINMA” 

The Federal Council opened the consultation on its complete banking stability package and the Liquidity Ordinance on 12 August. What is your initial impression?

We’re currently taking a careful look at the proposed measures. We welcome the fact that the Federal Council has created greater scope for proportionality in a number of areas, including liquidity provision and the senior managers regime. However, the package in its present form is still insufficiently differentiated and far too extensive. From our perspective, several measures are simply neither necessary nor effective. We take a critical view in particular of what we regard as a worrying accumulation of additional powers within FINMA that have no discernible benefit in terms of financial stability. 

The political debate often focuses on capital underpinning, but the SBA has stressed from the outset that the main lesson to be learned from the Credit Suisse crisis concerns liquidity. Why is that?  

Put simply, it’s because Credit Suisse’s failure wasn’t due to insufficient capital but to a loss of trust leading to a sudden outflow of customers’ money. The crisis demonstrated how quickly a digital bank run can occur these days. This is why we continue to give our emphatic support to improving the provision of liquidity in a crisis. The main aim here is also to prevent harm to the national economy as far as possible. 

The Federal Council proposes a series of measures to improve the provision of liquidity. What do you see as the central elements?  

Two separate but complementary measures are currently planned. The Swiss National Bank’s liquidity assistance is to undergo targeted optimisation and be shifted into the Extended Liquidity Facility. It’s important that the requirements for banks to prepare for this are reasonable and differentiated. At the same time, the Swiss Parliament is discussing a public liquidity backstop. We’re expressly in favour of this, but we reject any additional charge because substantial interest and premiums will already be payable if it takes effect.

Destigmatising central bank liquidity is often a discussion point. Why is that important?  

If a bank that calls on liquidity assistance from the SNB in its role as lender of last resort is then publicly stigmatised for it, that bank’s already stressed situation could worsen further – it could even trigger a run on other banks. Destigmatising is an important way to prevent this kind of unwanted procyclical effect. We can hardly remove the stigma completely, but the plan to delay announcing liquidity assistance is a step in the right direction. 

The Federal Council would like to introduce a senior managers regime. How can this contribute to stability?  

A senior managers regime defines and documents the responsibilities of key decision-makers. It can thus help to reduce misconduct and establish a responsible risk culture. We support it in principle because, as in the case of liquidity, there’s a clear link to the Credit Suisse crisis here too. That said, the regime must allow scope for proportionality and not lead to inefficient bureaucracy. The criterion proposed by the Federal Council for defining the scope of application lacks risk sensitivity. 

The resolvability of systemically important banks is another focus area. Why is that so important?  

From a regulatory policy perspective, it’s essential to allow companies – even banks – to collapse in a crisis. For systemically important banks in particular, orderly resolution has to be an option if efforts to restore stability fail. Appropriate preparation and resolvability are therefore very important. We still see substantial room for improvement in the Federal Council’s proposals. For example, greater account must be taken of the existing special rules applicable to individual banking groups or institutions. 

The SBA supports effective supervision but warns against turning FINMA into a “superauthority”. Where do you draw the line?  

We do support an effective and credible FINMA with robust enforcement powers in the interest of the financial centre’s international reputation and appeal. However, overreach should be avoided, especially when it has no clear impact on system stability, puts ineffective and potentially harmful instruments at FINMA’s disposal or even raises concerns in terms of the rule of law. Fines and early intervention are examples here, depending on how they’re handled. Particularly in the case of early intervention, there is a risk that FINMA, due to its risk aversion, will intervene in the bank’s business too early or too forcefully. 

What is needed for an overall package that strengthens the financial centre’s stability and competitiveness?  

We need a holistic view, and that’s what we’ve been lobbying for since this work began. Aside from this, our efforts at the ordinance level have borne fruit. What’s important now is finding solutions for the legislative measures that deliver the desired contribution to stability while also strengthening the banking centre’s competitiveness. We believe that this requires clear priorities, a measured approach to the actual wording and proportionality in terms of scope. It would be wrong to apply the same approach indiscriminately to all banks. The guiding principle must be that less can also be more.

How will the SBA play a part in the process going forward? 

Banking stability remains a key topic for us, and we’ll continue to devote a great deal of effort to it. We’ll express our criticisms and suggestions in the ongoing consultation constructively. After that, we’ll keep track of the parliamentary debate on the legislative proposals, and we’ll also engage proactively with member banks, politicians, government, academia, the media and the general public.