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Swiss Regulator Issues Strategies to Oversee Banks' Operations
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The Swiss Financial Market Supervisory Authority — FINMA — has issued its goals for 2025-2028. The four objectives pertain to organization, framework conditions, resilience and supervision. The objectives outline the ways in which the FINMA will carry out its function.
FINMA's objectives include strengthening oversight of the institutions it oversees, and helping them advance their governance and risk culture toward more stringent standards and distinct risk tolerance thresholds.
FINMA Supervision on Banks
FINMA intends to enhance Switzerland's financial system's stability by continuously developing supervisory instruments, procedures, and analysis to prevent and rectify irregularities, and ensure sound governance and robust risk management processes.
As part of its supervision, FINMA will continue to place a high priority on supervised institutions' financial resilience. It will focus on how supervised institutions manage market, credit, liquidity and actuarial risks. The regulator will also ensure that institutions maintain adequate capital and liquidity to survive major financial shocks.
FINMA will contribute to financial market regulation by advocating for effective supervision and early intervention, considering technological developments, and creating a supervisory framework for the Swiss financial market. This will ensure transparency and technology-neutral application.
FINMA will increase its efficiency as a supervisory authority, utilizing internal synergies and pushing for digital transformation. It will gradually increase direct supervision and actively report on its activities and mandate fulfillment.
FINMA Increase Supervision on UBS
FINMA stated that it would regularly assess how it oversees UBS Group AG (UBS - Free Report) as the country's authorities prepare to overhaul regulations to make the banking sector stronger. The supervisory approach for UBS will be reviewed on an ongoing basis and refined as necessary so that the risks associated with its systemic importance can be countered at all times.
Following Credit Suisse's collapse in 2023 and subsequent takeover by long-time rival UBS, the Swiss government presented several proposals in April to tighten banking sector regulations.
Among the proposals were increased powers for FINMA, although authorities are yet to decide how broad the new regulations should be. That procedure is projected to continue well into next year. As a follow-up to such recommendations, the government stated that it will make an announcement on FINMA's supervisory instruments in the first half of 2025.
UBS and Switzerland's three other systemically significant banks — Raiffeisen Group, PostFinance and Zuercher Kantonalbank — must be able to be restructured, wound up, or sold off without jeopardizing Swiss and international financial stability, FINMA informed.
With enhanced bank supervision and new strategic goals, FINMA has been advocating for greater monitoring powers, including the right to identify and shame banks that break its laws and pay fines.
US Banking Supervision by Regulators
Similar to Swiss regulations, U.S. banks are exposed to several regulations by authorities. The 2008 financial crisis gave rise to this annual assessment, which covered institutions with at least $100 billion in assets, including JPMorgan Chase & Co. (JPM - Free Report) , Goldman Sachs Group Inc. (GS - Free Report) and Bank of America Corp. (BAC - Free Report) . The stress tests, mandated under the Dodd-Frank financial services law, evaluate banks' capital adequacy, liquidity and risk management practices under adverse hypothetical scenarios, such as a deep recession and/or a sharp decline in asset prices.
In the wake of the 2008 financial crisis, the Dodd-Frank legislation passed in 2010 mandated that banks of a certain size create these plans regularly, outlining how they could be wound down in the event of a crisis without endangering the larger financial system. In June 2024, U.S. banking regulators detected flaws in strategies that JPM, GS and BAC submitted outlining their plans for winding down during a catastrophic event. All three banks were advised to report to regulators on plans to correct their inadequacies by September.
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Swiss Regulator Issues Strategies to Oversee Banks' Operations
The Swiss Financial Market Supervisory Authority — FINMA — has issued its goals for 2025-2028. The four objectives pertain to organization, framework conditions, resilience and supervision. The objectives outline the ways in which the FINMA will carry out its function.
FINMA's objectives include strengthening oversight of the institutions it oversees, and helping them advance their governance and risk culture toward more stringent standards and distinct risk tolerance thresholds.
FINMA Supervision on Banks
FINMA intends to enhance Switzerland's financial system's stability by continuously developing supervisory instruments, procedures, and analysis to prevent and rectify irregularities, and ensure sound governance and robust risk management processes.
As part of its supervision, FINMA will continue to place a high priority on supervised institutions' financial resilience. It will focus on how supervised institutions manage market, credit, liquidity and actuarial risks. The regulator will also ensure that institutions maintain adequate capital and liquidity to survive major financial shocks.
FINMA will contribute to financial market regulation by advocating for effective supervision and early intervention, considering technological developments, and creating a supervisory framework for the Swiss financial market. This will ensure transparency and technology-neutral application.
FINMA will increase its efficiency as a supervisory authority, utilizing internal synergies and pushing for digital transformation. It will gradually increase direct supervision and actively report on its activities and mandate fulfillment.
FINMA Increase Supervision on UBS
FINMA stated that it would regularly assess how it oversees UBS Group AG (UBS - Free Report) as the country's authorities prepare to overhaul regulations to make the banking sector stronger. The supervisory approach for UBS will be reviewed on an ongoing basis and refined as necessary so that the risks associated with its systemic importance can be countered at all times.
Following Credit Suisse's collapse in 2023 and subsequent takeover by long-time rival UBS, the Swiss government presented several proposals in April to tighten banking sector regulations.
Among the proposals were increased powers for FINMA, although authorities are yet to decide how broad the new regulations should be. That procedure is projected to continue well into next year. As a follow-up to such recommendations, the government stated that it will make an announcement on FINMA's supervisory instruments in the first half of 2025.
UBS and Switzerland's three other systemically significant banks — Raiffeisen Group, PostFinance and Zuercher Kantonalbank — must be able to be restructured, wound up, or sold off without jeopardizing Swiss and international financial stability, FINMA informed.
With enhanced bank supervision and new strategic goals, FINMA has been advocating for greater monitoring powers, including the right to identify and shame banks that break its laws and pay fines.
US Banking Supervision by Regulators
Similar to Swiss regulations, U.S. banks are exposed to several regulations by authorities. The 2008 financial crisis gave rise to this annual assessment, which covered institutions with at least $100 billion in assets, including JPMorgan Chase & Co. (JPM - Free Report) , Goldman Sachs Group Inc. (GS - Free Report) and Bank of America Corp. (BAC - Free Report) . The stress tests, mandated under the Dodd-Frank financial services law, evaluate banks' capital adequacy, liquidity and risk management practices under adverse hypothetical scenarios, such as a deep recession and/or a sharp decline in asset prices.
In the wake of the 2008 financial crisis, the Dodd-Frank legislation passed in 2010 mandated that banks of a certain size create these plans regularly, outlining how they could be wound down in the event of a crisis without endangering the larger financial system. In June 2024, U.S. banking regulators detected flaws in strategies that JPM, GS and BAC submitted outlining their plans for winding down during a catastrophic event. All three banks were advised to report to regulators on plans to correct their inadequacies by September.