Federal Council Adopts Bank Regulation Package

On 1 June 2012, the Federal Council adopted a package of measures with the objective of strengthening Switzerland’s banking centre. The package includes the adoption of a total revision of the Capital Adequacy Ordinance, which requires banks to comply with the new capital adequacy rules promulgated by the Basel Committee on Banking Supervision (Basel III) from 1 January 2013 (over a phase-in period of five years). Furthermore, the revised Capital Adequacy Ordinance and the partially revised Banking Ordinance contain the implementing provisions of the too-big-to-fail legislation, which was enacted by Parliament on 30 September 2011. Under the new rules, systemically important banks will have to comply with supplementary capital and risk diversification requirements, as well as present an effective emergency plan to FINMA. The revised Capital Adequacy Ordinance and the amended Banking Ordinance will enter into force on 1 January 2013, whereby the ordinance provisions for systemically important banks still have to be approved by Parliament beforehand, which approval is expected for September. The regulation package adopted by the Federal Council on 1 June 2012 also contains two immediate measures that will introduce a mechanism for activating a countercyclical buffer and impose more risk-oriented requirements for the capital underpinning residential mortgage lending. See also CapLaw-2012-2.

Reference: CapLaw-2012-34