Prudential regulationi Relationship with the prudential regulator
The Swiss banking supervision system is based on an indirect (or dual) supervision model. Banks, foreign banks' branches and financial groups (or conglomerates) subject to Swiss supervision must appoint an external audit company supervised by the Federal Audit Oversight Authority. The auditor assists FINMA in its supervisory functions: it examines annual financial statements, and reviews whether regulated entities comply with their by-laws and with Swiss financial markets regulation and self-regulatory provisions. FINMA requires that financial and regulatory audits be conceptually separated and may require, where appropriate, that these two audits be carried out by different audit firms. The results of the financial and regulatory audits are detailed in annual audit reports that are to be handed over to the supervised entity and to FINMA. FINMA exercises its oversight and ascertains whether the various regulatory requirements are complied with, largely based on these reports. The intensity of the supervision and the direct involvement of FINMA, in particular as regards qualitative aspects of supervision, depend on the category to which a bank or securities firm is assigned. In this context, FINMA applies a risk-oriented supervision, classifying regulated banks and securities firms according to their importance (notably in terms of assets under management, deposits and required equity) and risk profile:
- category 1 institutions are extremely large, important and complex market participants, which require intensive and continuous supervision;
- category 2 institutions are deemed very important and complex, and require close and continual supervision;
- category 3 market participants are large and complex, to which a preventive supervision model is applied; and
- category 4 and 5 institutions are small to medium-sized participants, for which event-driven and theme-based supervision is generally deemed sufficient.
In addition, auditors are obliged to inform FINMA if they suspect any breach of law or uncover other serious irregularities. Supervised entities also have a general duty to inform FINMA of any event or incident that may be of relevance from a supervisory perspective. Furthermore, banks have special reporting duties: for instance, in cases of changes in the foreign controlling persons (or entities), in the qualified shareholders, and in the status of statutory equity capital, liquidity ratios or risk concentrations. Based on these informational tools, FINMA initiates investigations (if necessary, through an appointed investigator) and, if a breach is ascertained, takes administrative measures aimed at restoring compliance. In cases of serious breach, FINMA can ultimately decide to withdraw a licence. In the event of serious breach (and, in particular, in the event of violation of market conduct rules), FINMA may also order the disgorgement of illegally generated profits. In practice, the most common sanctions that FINMA imposes relate to the forced liquidation of unauthorised securities firms, insolvency procedures and sanctions following non-compliance with Swiss know your customer rules.
Following the 2008 financial crisis, a more rigorous supervisory regime was put in place for UBS AG and Credit Suisse AG, as the size and complexity of these institutions raise systemic risks. Accordingly, FINMA does not rely exclusively on the reports of the banks' auditors, but carries out its own investigations and maintains close contact with the two banks.
FINMA has generally been more active and interventionist than was previously the case, with these two banks as well as with the other systemically important financial institutions. For several years, and in accordance with its risk-based approach, FINMA has carried out extensive stress tests at Credit Suisse AG and UBS AG to periodically and systemically assess their resilience against sharp deteriorations in economic conditions. Systemic banks are subject to a specific regime in terms of capital adequacy (see Section III.iii) and crisis resistance. In this context, they are required to establish detailed recovery and resolution plans, as well as to implement specific corresponding organisational measures. As an example, both Credit Suisse AG and UBS AG have set up a non-operating holding company as group parent, and they have transferred Swiss-based systemically important functions to separate subsidiaries. Within FINMA, a specific division, the Recovery and Resolution Division, which is in charge of crisis restructuring and insolvency proceedings, monitors and coordinates these emergency and resolution planning efforts.
In 2020, FINMA introduced a specific regime for small banks (supervisory categories 4 and 5). This regime aims at reducing the regulatory burden on small, particularly liquid and well-capitalised institutions, without jeopardising their stability and safety. Banks eligible to participate in the small banks regime may benefit from a significantly less complex regulatory regime under the Capital Adequacy Ordinance (CAO) that allows them to, for example, waive the requirements with respect to the calculation of risk-weighted assets. Likewise, the Liquidity Ordinance (LO) provides for a relaxation of the applicable liquidity coverage ratio (LCR) requirements for these institutions. The implementation of the small banks regime triggered the revision of the CAO, as well as of eight different FINMA circulars.4 Those revisions became definitive on 1 January 2020.ii Management of banks
The granting of a banking or securities firm licence is conditional upon the fulfilment of certain organisational requirements. In particular, the articles of incorporation and internal regulations of a bank must define the exact scope of business and the internal organisation, which must be adequate for the activities of the bank. As a general rule, two separate corporate bodies must be in place:
- a board of directors that is primarily in charge of the strategic management of the bank, and the establishment, maintenance, monitoring and control of the bank's internal organisation. The board must comprise at least three members who meet professional qualifications, enjoy a good reputation and offer every guarantee of proper business conduct. Depending on the size, complexity and risk profile of the bank, FINMA may require that the board comprises more than three members. In addition, FINMA expects, as a rule, that a substantial number of the board members have a close relationship to Switzerland in terms of residence, career or education. In practice, FINMA expects at the very least that the chair or vice chair of the board be domiciled in Switzerland. As a matter of principle, the board must be free of any conflicts of interest with the management or with the bank itself. By law, the board of directors of a Swiss bank is non-executive, with a strict prohibition of a double mandate both as director and manager; and
- the executive management, which also implements the instructions of the board of directors. Its members must meet the various professional qualifications and fit and proper tests. As a rule, FINMA requires that a Swiss bank be managed from Switzerland, and senior managers are typically expected to be domiciled in Switzerland.
Under FINMA practice, the strategic management, supervision and control by the board of directors, the central management tasks of the management, and decisions concerning the establishment or discontinuation of business relationships may not be delegated to another affiliated or non-affiliated entity. As a result, a Swiss bank that is a subsidiary of a foreign group must be granted a certain degree of independence in its decision-making process. General instructions and decisions from a foreign parent entity are permitted, however. For the rest, as a general rule, outsourcing of other functions within a Swiss bank to affiliated or non-affiliated service providers both in Switzerland and abroad is generally permitted, subject to the satisfaction of certain requirements, in particular in relation to Swiss banking secrecy and data protection rules. Since 1 April 2018, outsourcing by banks has been governed by FINMA Circular 2018/3, which regulates the way in which banks handle outsourced services. The Circular retains its principle-based and technology-neutral approach and imposes, inter alia, the following rules:
- banks must maintain an up-to-date inventory of all outsourced services, including information regarding the outsourced services, the service provider, the service recipient and the responsible unit within the financial institution;
- in the case of outsourcing outside Switzerland, banks have to make sure that all necessary data for reorganisation, resolution and liquidation purposes remain accessible in Switzerland at all times;
- the requirements provided by the Circular are to be complied with regardless of whether outsourcing is within a group, although the intra-group nature of an outsourcing may be taken into account for risk assessment purposes; and
- banks are required to assess compliance with requirements for data protection and banking secrecy, separately, in light of the relevant applicable statutes.
FINMA Circular 2018/3 applies to all outsourcing arrangements. That being said, outsourcing arrangements that were in place before 1 April 2018 benefit from a transition period until 1 April 2023 to adapt to the new regulatory requirements.
Specific constraints and requirements regarding the organisation of a Swiss bank (e.g., with respect to internal audit, controls, compliance and reporting, segregation between trading, asset management and execution function) vary depending on the actual business and size of the bank.
In this context, FINMA Circular 2010/1 on remuneration schemes, the purpose of which is to increase the transparency and risk orientation of compensation schemes in the financial sector, provides for 10 principles that certain financial institutions must observe. Although these rules do not impose any absolute or relative cap on remuneration, FINMA requires that variable compensations (i.e., any part of the remuneration that is at the discretion of the employer or contingent upon performance criteria) be dependent on long-term sustainable business performance, taking into account assumed risks and costs of capital. FINMA thus expects a significant portion of the remuneration to be payable under deferral arrangements. Furthermore, the compensation policy is to be disclosed annually to FINMA. These rules are mandatory for banks, securities firms, financial groups (or conglomerates), insurance companies, and insurance groups and conglomerates with capital or solvency requirements in excess of 10 billion Swiss francs. In practice, this concerns UBS AG and Credit Suisse AG. For other financial institutions, the Circular represents guidelines for adequate remuneration policies.
FINMA can, however, deviate from this and require, where appropriate, a determined institution to comply with some or all of the provisions of Circular 2010/1.
Finally, FINMA Circular 2017/1 on corporate governance and revised Circular 2008/21 on operational risks integrate the key principles of corporate governance and risk management issued by the Banking Committee on Banking Supervision into Swiss regulation. These circulars consolidate and strengthen several requirements that previously derived from less formal guidance and FINMA practice, notably as regards internal control processes and instances, as well as risk management frameworks and responsibilities.iii Regulatory capital and liquidity
The Swiss regulatory capital and liquidity regimes implement the Basel III recommendations.5 Capital adequacy and measurement rules are set out in the CAO, and the Basel minimum standards are defined therein by reference to the most recent recommendations of the Basel Committee on the calculation of capital requirements.
As the Basel III capital requirements are minimum requirements and Switzerland has a tradition of imposing more stringent capital requirements on its banks, the CAO provides for an additional layer of capital (additional capital), which requires Swiss banks to have additional capital based on the size and specificities of their business.
Compared to Basel III, the CAO provides for:
- the possibility of a direct deduction from Common Equity Tier 1 capital as an alternative to a risk-weighting of an asset; and
- the application of requirements on a stand-alone basis for which Basel III does not make any recommendations.
As regards credit risks, Swiss banks can choose between the standard approach (international standard SA-BIS) and an internal ratings-based approach (IRB) in its two variations: foundation IRB or advanced IRB.
As regards operational risks, Swiss banks can choose between the basic indicator and the standard approach as simple methods. A Swiss bank having the necessary resources may also choose the advanced measurement approach and thereby use a tailor-made proprietary risk model approved by FINMA.
As regards market risks, the CAO implements the respective rules developed by the Basel Committee in cooperation with the International Organization of Securities Commissions. Capital requirements must be met both at the level of the individual institution and at the level of the financial group or conglomerate. Stand-alone reporting is required on a quarterly basis and consolidated reporting on a semi-annual basis.
The required capital is as follows.Minimum capital requirements
The minimum capital requirements (after application of regulatory adjustments) call at all times for an aggregate (Tier 1 and Tier 2) capital ratio of 8 per cent of a bank's risk-weighted assets, with a minimum Common Equity Tier 1 capital ratio of 4.5 per cent and a minimum Tier 1 capital ratio of 6 per cent of such risk-weighted assets.6 In this context, banks' assets are notably weighted against credit risk, non-counterparty-related risks, market risks, operational risks, risks under guarantees for central counterparties and value adjustment risks in connection with derivative counterparty credit risks.Capital buffer
Banks must have a capital buffer up to the amount of the total capital ratio in accordance with requirements specified in the CAO for each bank category. If the minimum ratio is not met because of unforeseeable events, such as a crisis within the international or Swiss financial system, this does not amount to a breach of the capital requirements, but a deadline will be set by FINMA for replenishing the capital buffer.Countercyclical buffer
The Swiss National Bank (SNB) can request the Federal Council to order that banks must maintain a countercyclical buffer of up to 2.5 per cent of all or certain categories of their risk-weighted assets in Switzerland in the form of Common Equity Tier 1 capital if this is deemed necessary to back the resiliency of the banking sector with respect to risks of excessive credit expansion or to counter an excessive credit expansion. The countercyclical buffer of 2 per cent applicable to loans secured by Swiss residential property was deactivated at the outset of the covid-19 pandemic in March 2020. Since the risk on the mortgage and residential real estate market has increased in the meantime, the countercyclical buffer will be reactivated at an increased rate of 2.5 per cent as of 30 September 2022.Extended countercyclical buffer
Banks with total assets of at least 250 billion Swiss francs, of which the total foreign commitment amounts to at least 10 billion Swiss francs, or with a total foreign commitment of at least 25 billion Swiss francs, are further required to maintain an extended countercyclical buffer in the form of Common Equity Tier 1 capital. An extended countercyclical buffer is calculated on the basis of foreign private sector credit exposures, including non-bank financial sector exposures.Additional capital requirements
In special circumstances and on a case-by-case basis, FINMA may demand that certain banks maintain additional capital, notably to respond to risks that FINMA deems not adequately covered by the minimal capital requirements. The additional capital requirements, with the capital buffer, primarily aim at ensuring that the minimum capital requirements can also be met under adverse conditions.Qualifying capital
To qualify under the capital requirements, equity must be fully paid in or have been generated by the bank. As a rule, it cannot be directly or indirectly financed by the bank, set off against claims of the bank or secured by assets of the bank. All qualifying capital must be subordinated to all unsubordinated claims of creditors in the case of liquidation, bankruptcy or restructuring of the bank. Capital instruments that are not only convertible, or subject to a conditional waiver in the case of an imminent insolvency of a bank, are qualified based on their respective terms prior to conversion or reduction, other than in the context of the requirements for additional capital or convertible instruments of systemic banks.
The capital qualifying under the above general requirements is divided into Tier 1 capital and Tier 2 capital. Tier 1 capital is, in turn, subdivided into:
- Common Equity Tier 1 capital, which consists of the paid-in capital, disclosed reserves, reserves for general banking risks (after deduction of latent taxes unless provided for) and profits carried forward and, with certain limitations, profits for the current business year as shown on audited interim financial statements reviewed in accordance with FINMA guidelines; and
- Additional Tier 1 capital, which consists of perpetual equity or debt instruments with restricted optional repayments and discretionary distributions providing for a conversion into Common Equity Tier 1 instruments (or, in the case of equity instruments without a conversion feature, a waiver of any privilege over Common Equity Tier 1 instruments), or a reduction and write-off to contribute to the restructuring of a bank in the case of its threatened insolvency (point of non-viability (PONV)). The conversion or reduction must take place no later than at the acceptance of public aid or when ordered by FINMA to avoid insolvency in the case of equity instruments, whereas an additional trigger of breaching a minimum threshold of 5.125 per cent of Common Equity Tier 1 capital is required for debt instruments. Debt instruments with capital reduction may provide for a conditional participation in the benefits of a subsequent recovery of the bank's financial situation. Additional Tier 1 capital issued by a special purpose vehicle, the proceeds of which are immediately and without restrictions passed on to the ultimate holding company or an operative company of the group in the same or higher quality, qualifies as Additional Tier 1 capital on a consolidated basis.
Tier 2 capital consists of equity or debt instruments with a minimum term of five years with restricted optional repayments and discretionary distributions providing for their conversion or reduction at such time as the bank reaches the PONV as for Additional Tier 1 capital. During the five years before final maturity, the amount of such instruments that qualify is reduced by 20 per cent of their nominal amount for each year.Regulatory deductions
Banks must apply full or threshold deductions to the above capital elements to account for various items, such as losses, unfunded valuation adjustments, goodwill, deferred tax assets and defined benefit pension fund assets in line with the Basel minimum standards.Leverage ratio
Based on the LO, which implements a leverage ratio in line with Basel III, FINMA Circular 2015/3, 'Leverage ratio - banks' defines the methodology for calculating the leverage ratio in line with the Basel III methodology.
In accordance with Basel III requirements, the CAO requires a risk-weighted capital ratio as well as an unweighted capital adequacy requirement for all non-systemic banks. A safety net in the form of a leverage ratio has been implemented and provides for a minimum core capital (Tier 1) to a total exposure ratio of 3 per cent for all non-systemic banks. The FINMA Circular 2015/3 enables banks to also apply the Basel III standard approach for derivatives when calculating the leverage ratio.Risk diversification rules
The maximum risk concentration permissible is 25 per cent of the overall required capital (after application of required deductions). The CAO provides that risk concentrations are to be measured only against core capital (Tier 1), meaning that supplementary capital (Tier 2) is generally not taken into account. Moreover, banks are allowed only very restricted use of models for determining their risk concentrations, as modelling errors have a major impact when calculating these risks. The risk diversification provisions in the CAO are supplemented by FINMA Circular 2019/1, 'Risk diversification - banks'.
Compliance with capital adequacy requirements has to be reported to the SNB on a quarterly basis and is one of the topics addressed in the long-form reports issued by banks' external auditors on a yearly basis.Liquidity requirements
The LO sets out the quantitative and qualitative requirements for the minimum liquidity for banks. Although FINMA is in charge of the implementation and enforcement of the LO, it must consult with the SNB on any questions relating to its implementation.
The LO implements the quantitative elements required by the Basel III framework for the LCR. The implementation of the net stable funding ratio (NSFR), which was postponed owing to delays in the introduction of the NSFR on the EU and US financial markets, was implemented in July 2021 (along with the revised FINMA Circular 2015/2 on the liquidity risks for banks), in line with the implementation in the EU and US. As mentioned in Section III.i, reduced LCR requirements apply to small banks, which are further detailed in FINMA Circular 2015/2.
Banks have to report their LCR at each month end to the SNB. Banks that hold privileged deposits must maintain additional liquid assets to cover their respective obligations, as set by FINMA, based on the amount of privileged deposits reported annually by the bank.Specific regime applicable to systemic banks: capital, liquidity and risk diversification
The CAO sets out the specific capital requirements for SIBs and G-SIBs in line with G20 standards.
SIBs must have sufficient capital to ensure continuity of their service at times of stress and to avoid state intervention, restructuring or winding up by FINMA (i.e., going concern capital requirement). The going concern requirement consists of a basic and a progressive component, and is set with respect to both the bank's leverage ratio and its risk-weighted assets.
The progressive component is calculated based on the degree of systemic importance of a bank, such as its size and market share. The basic going concern capital requirement of a SIB consists of a base requirement of 4.5 per cent leverage ratio and a 12.86 per cent risk-weighted assets ratio, and a surcharge. With the inclusion of the progressive component, G-SIBs will have to comply with a 5 per cent leverage ratio and a 14.3 per cent risk-weighted assets ratio. The size of the surcharge is set with respect to the degree of systemic importance (i.e., the total exposure and the market share of the relevant SIB). The going concern requirement is further split into a minimum requirement component of a 3 per cent leverage ratio and an 8 per cent risk-weighted assets ratio that a SIB has to maintain at all times, and a buffer component by which a SIB may temporarily fall short (e.g., in the case of losses and under strict conditions).
Systemic banks operating at an international level are further subject to an additional capital requirement to guarantee their recovery or the continuation of their systemic functions in an operating unit while liquidating other units without support from the public (i.e., gone concern requirement). By analogy, the gone concern requirement of a G-SIB quantitatively corresponds to its total going concern capital requirement: that is, a minimum 4.5 per cent leverage ratio and a minimum 12.86 per cent risk-weighted assets ratio, plus any surcharges applicable to the relevant G-SIB, to the exclusion of countercyclical buffers. After consultation with the SNB, FINMA may lower the level of those requirements, based on the effectiveness of measures taken to improve the global resolvability of the relevant G-SIB group and in consideration with other factors. However, the gone concern requirement must not fall below a 3.75 per cent leverage ratio or a 10 per cent risk-weighted assets ratio. The gone concern requirement is complied with, as a general rule, by means of bail-in instruments such as bonds with conversion rights, subject to the regulator's decision. Following the introduction of gone concern capital requirements for the G-SIBs (UBS and Credit Suisse) in 2016, these now also apply to the SIBs. The CAO also provides for specific rules for the treatment of systemically important banks' stakes in their subsidiaries (see below). Further amendments to the CAO were introduced in January 2020 to ensure that the parent entities of systemically important financial institutions are sufficiently well capitalised in the event of a crisis. In particular, certain group entities of systemically important banks, such as their parents or Swiss units performing systemically important functions, will need to fulfil, both at group level and on a stand-alone basis, the specific requirements with which systemic banks have to comply.
Systemic banks also must satisfy the countercyclical buffer and extended countercyclical buffer requirements. Capital requirements apply both on a stand-alone and consolidated basis. Finally, FINMA may, in extraordinary circumstances, require a SIB to hold additional capital or demand that the going concern capital requirement is fulfilled with higher-quality capital.
In addition, systemic banks are subject to more stringent liquidity requirements both on a stand-alone and a consolidated basis, which take into account extraordinary stress scenarios. As a result, systemic banks must be able to cope with all liquidity drains that are to be expected under a particular stress scenario over a period of 30 days. In this context, no liquidity gap, as defined for the relevant period in the LO, may arise on a seven-day and a 30-day liquidity outlook. The particular stress scenario must be based on the assumption that, inter alia, the bank loses access to financing in the markets, and that large amounts of deposits are being withdrawn. Systemic banks must further hold a regulatory liquidity buffer consisting of primary and secondary buffers comprising determined qualifying assets listed in the LO. However, FINMA may modify the list and determine the minimum deductible to establish the sales value of the assets.
As regards risk diversification, the maximum risk concentration permissible for systemic banks is 25 per cent (or, in the case of exposure to another systemic bank, 15 per cent) of the Common Equity Tier 1 capital (other than Common Equity Tier 1 capital constituting the progressive element) only. The CAO provides for specific rules for the treatment of systemically important banks' stakes in their subsidiaries. The same regime applies to SIBs and G-SIBs. This regime provides, inter alia, for an abolition of the full deduction of parent companies' positions held in subsidiaries from core equity capital and of the accompanying relief measures allowed for these two large banks and for replacement thereof, after a transition period, by a risk weighting of up to 250 per cent with respect to positions in Swiss-based subsidiaries and 400 per cent with respect to positions in foreign subsidiaries of these two large banks. These requirements relate to parent companies' stand-alone capital ratios, but not the consolidated ratios.iv Recovery and resolution
The provisions of the BA dealing with insolvent banks aim at streamlining reorganisation procedures, ensuring prompt repayment of preferential deposits and the continuity of basic banking services. These provisions enhance the flexibility of such proceedings, and confer additional instruments and powers to FINMA with a view to increasing the likelihood of a successful reorganisation. FINMA is, for instance, empowered to order a transfer of all or part of a failing bank's activities to a bridge bank, the conversion of certain convertible debt instruments issued by the bank (CoCos or convertibles), the reduction or cancellation of the bank's equity capital and, as an ultima ratio, the conversion of the bank's obligations into equity.
The FINMA Banking Insolvency Ordinance reflects a quite extensive interpretation of the new instruments and powers of the BA. For instance, it allows FINMA to order, as an ultima ratio to ensure the presence of sufficient equity capital, the conversion of the bank's obligations (third-party funding) into equity capital, with the exception of certain limited claims that would be ranked in privileged classes in the event of a liquidation procedure. This measure could also potentially concern clients' deposits that do not qualify as preferential deposits (being defined as cash deposits of up to 100,000 Swiss francs whose payment would be secured within liquidation proceedings). FINMA may order a stay of early termination rights (and, as a result, netting, private realisation of collateral and porting) with any of the protective or reorganisation measures it may take in the event of insolvency risk and in relation to any contractual agreement with the bank. Where agreements subject to termination rights in the case of protective or reorganisation measures are governed by non-Swiss law or non-Swiss jurisdiction clauses, the Banking Ordinance (BO) generally requires, for enforceability purposes, that Swiss banks and securities firms only enter into new agreements or agree to the amendment of agreements, provided the counterparty contractually acknowledges and consents to a stay of the termination right.
On 19 June 2020, the Federal Council submitted to Parliament proposed amendments to the BA. Among other things, the proposed amendments aim at strengthening the legal basis by specifying the reorganisation procedure and the reorganisation measures at the level of the BA itself rather than in the Banking Insolvency Ordinance, and increasing the effectiveness of certain bank resolution measures. In particular, there are detailed regulations proposed with regard to the claims that qualify for bail-in measures and the order of priority of such claims. Furthermore, the content of the restructuring plan is specified and the requirement that a restructuring plan needs to put creditors in a better position than liquidation shall be replaced by the more usual 'no-creditor-worse-off-than-in-liquidation' requirement. Furthermore, the available capital measures (cancellation of existing equity and the write-down or conversion of debt into equity) shall be addressed in more detail. Compared with the current legislation, conversion of debt into equity will no longer be an ultima ratio measure but may be ordered by FINMA if it is deemed to be the most appropriate measure. Further amendments relate to the deposit protection scheme, which shall be improved in three main ways: the first is to require a Swiss bank to pay cash deposits within seven business days of its bankruptcy (instead of 20 days, as currently provided), which is in line with international standards. Further, banks would no longer need to secure half or their obligatory deposit insurance contributions in the form of additional liquidity, but by depositing securities or Swiss francs in cash with a custodian. Finally, the maximum commitment is proposed to be raised from the current maximum of 6 billion Swiss francs to 1.6 per cent of the total amount of secured deposits, with a minimum of 6 billion Swiss francs. These amendments have been addressed by Parliament and are expected to come into force in early 2023.
In line with international standards, systemic banks must have both a recovery plan and a resolution plan for identifying risks to the stability of the financial system due to their systemically important nature, and to determine viable ways of dealing with the effects of a crisis. Pursuant to the BO, a systemic bank has to establish a recovery plan that contains the measures that it would implement in the event of a crisis and that would allow it to pursue its activity without requiring government funds. Responsibility for drafting and regularly updating the recovery plan lies at executive board level of the systemic bank and must be embedded in a viable corporate governance framework. The recovery plan and any amendments thereto are subject to FINMA's approval. On 19 March 2021, FINMA confirmed that the recovery and resolutions plans of Credit Suisse and UBS (G-SIBs), as well as the recovery plans of Zurich Cantonal Bank, Raiffeisen Switzerland and PostFinance (SIBs), were in place, while noting that the resolutions plans of Zurich Cantonal Bank, Raiffeisen Switzerland and PostFinance were still subject to improvement.