Swiss Regulator Finds Crisis Plans Lacking In Two Major Banks

The Swiss financial regulator FINMA, declared on Wednesday that the recovery and resolution plans of two of Switzerland's five systemically important banks were insufficient.

FINMA raised concerns regarding the crisis management capabilities of Zuercher Kantonalbank (ZKB) and PostFinance, and their ability to sustain normal operations during a crisis. It said "ZKB has not yet built up the required capital in full" and that "PostFinance must realign its emergency planning."

The evaluation conducted by FINMA assessed the contingency strategies of the primary banks in Switzerland, as of the conclusion of 2022. As a result, the appraisal did not consider the amalgamation of UBS and Credit Suisse.

Last year, the financial overseer had given Credit Suisse's crisis plan a favorable assessment, stating that the bank's emergency strategy was primed for execution. However, the bank had to be acquired by UBS in a takeover facilitated by Swiss authorities the previous month.

"It is clear that there are important lessons to be learned from the Credit Suisse crisis for future crisis preparations," FINMA'S Chief Executive Urban Angehrn said.

After Credit Suisse's acquisition, the regulator refused to take responsibility for the crisis at the nation's second-largest bank. The regulator claimed to have acted swiftly and instead demanded more authority to hold financial institutions accountable.