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Banking sector

Structure

Banks in Switzerland differ significantly with regard to their size, business focus, geographical scope of activities and legal form. For its assessment of the stability of the Swiss banking sector, the Swiss National Bank (SNB) mainly focuses on the big banks (Credit Suisse and UBS) and the domestically focused commercial banks. The latter comprise banks whose share of domestic loans to total assets exceeds 50%. For more details about the number and categories of banks active in Switzerland, see the SNB statistical yearbook (Banks in Switzerland).

The SNB's assessment of the Swiss banking sector's stability is presented in the Financial Stability Report. 

Regulation and oversight

Banks operating in Switzerland are subject to the Federal Act on Banks and Savings Banks (Banking Act) (www.admin.ch, in German and French).

Detailed regulations - e.g. on capital, liquidity and risk diversification - are contained in the Ordinance on Banks and Savings Banks (Banking Ordinance) (www.admin.ch, in German and French). The banking legislation also takes account of international agreements and recommendations, e.g. the Basel Capital Adequacy Framework. The statutory provisions are supplemented by codes of conduct and recommendations that the banks themselves have adopted as a self-regulatory measure (www.swissbanking.org).

Within this regulatory framework, the SNB is assigned explicit responsibilities in two important areas: The regulatory framework stipulates that banks that are systemically important for Switzerland are subject to special capital, liquidity and organisational requirements (cf. Chapter 5 Banking Act). The SNB is responsible for the determination of systemically important banks and their systemically important functions (cf. Chapter 5 art. 8 Banking Act; Decrees issued by the Swiss National Bank concerning systemic importance).

Furthermore, the regulatory framework stipulates that capital requirements may be raised temporarily should imbalances on the Swiss lending market - and corresponding risks to financial stability - develop. The decisions on the activation, deactivation and level of this countercyclical capital buffer will be made by the Federal Council, upon the proposal of the SNB. The SNB consults FINMA before submitting its proposal to the Federal Council (Publications relating to the CCB).

The Swiss Financial Market Supervisory Authority (FINMA, www.finma.ch) grants banking licences and is responsible for supervising banks.

Cooperation between FINMA and the SNB is governed by a memorandum of understanding (MoU).

Data and analysis

The financial intermediaries that are subject to the Federal Act on Banks and Saving Banks (Banking Ordinance) (www.admin.ch, in German and French) are obliged to report data on their balance sheet, income statement, capital and liquidity to the SNB. The SNB publishes the data in aggregated form - i.e. for the bank categories - in its statistical yearbook Banks in Switzerland and in the Publication set Monthly banking statistics (data.snb.ch). The analysis of the state and stability of Switzerland's banking sector is contained in the SNB's annual Financial Stability Report.