What about other systemically important banks in Switzerland after the end of Credit Suisse? Finma’s annual report gives little cause for optimism.
None of the three national, systemically important banks – Zürcher Kantonalbank (ZKB), Postfinance and Raiffeisen – have reserved sufficient capital for emergencies. This is what the Swiss Financial Market Supervisory Authority (Finma) writes in its annual report.
The report to read
What is remarkable is that similar wording can also be read in earlier annual reports. In Finma jargon it is said that the emergency plans are “again not feasible”. For economics professor Peter V. Kunz at the University of Bern, this means: “If these banks got into a crisis, they could not be saved.”
If these banks got into a crisis, they could not be saved.
In an emergency plan, systemically important banks must show how they can be stabilised, restructured or liquidated in the event of a crisis. Of course, these big banks are not currently on the verge of failure, says Kunz. But he was surprised that the emergency plans were still classified as “unworkable”.
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Peter V. Kunz fears that smaller, systemically important banks, such as Postfinance, might not be able to be saved in an emergency.
Keystone / Marcel Bieri
Above all, the banking expert criticizes the scarcity of information from Finma. One cannot simply write in the annual report that the emergency plans of systemically important banks are not in order.
The supervisory authority must show how a bank can be saved in an emergency: “That is exactly the task of this regulation. Now it is being said that the regulation is in place – but cannot be implemented. Finma needs further explanations,” says Kunz.
Communicative corset
Professor Kunz wonders how the supervisory authority will react to its findings in the annual report. How long do the defaulting banks have to prepare for emergencies? up to date bring to? How does Finma enforce the requirements?
This cannot be communicated, Finma explained on request. Finma President Marlene Amstad also made this dilemma clear on Wednesday in a media briefing on the takeover of CS by UBS: “Many of our measures – and often the most severe ones – cannot be made accessible to the public.” Finma made an exception for CS and disclosed some points of its work.
A clear announcement would also be important for the three national systemically important banks, says Kunz. The fact that more than ten years after the “Too big to fail” emergency regulation was still said to be on the way there is not a good sign.
I have been criticizing Finma’s bite inhibition for years. But I have already said that she has no teeth at all.
Finma is usually very strict with the small banks – but with the big banks they have a bite inhibitions: “I have been criticizing that for years. But I have already said that Finma has no teeth at all. »
Green light for Raiffeisen
The Finma contradicts bite inhibition. The large institutes such as ZKB or Postfinance would be supervised much more intensively than small banks. In many cases, Finma has “bitten” the big banks.
And how do the affected banks assess their emergency plans? The Zürcher Kantonalbank writes that it will meet the full requirements in a timely manner. At Postfinance, it is said that the work on emergency planning is still in progress and that the revised version will be submitted to Finma for review in good time.
When exactly the banks will meet the requirements remains open. However, the Raiffeisenbank has achieved the goal, as announced on Maundy Thursday. Finma gave the green light to its emergency plan.