The emergency plans of UBS and Credit Suisse to deal with a financial disaster are efficient, Switzerland’s regulator FINMA mentioned Tuesday.
The assessment follows a review of the recovery and resolution plans for the nation’s big banks, which FINMA ordered to be submitted by 2019 end.
The review followed the implementation of Switzerland’s Too Big to Fail guidelines, aimed toward reducing risks in the nation’s financial system and avoiding the need for taxpayer-funded rescues.
The legal guidelines, brought in after UBS was rescued by the Swiss government back in 2008, are supposed to ensure functions like domestic deposit-taking and lending continue even throughout an extreme crisis.
The emergency plans of the other three systemically significant banks – PostFinance, Raiffeisen and Zuercher Kantonalbank, don’t meet the statutory standards yet, the regulator added.
FINMA stated UBS met the necessities for an effective emergency plan, though certain joint and several liabilities remain high. Credit Suisse’s emergency plan was efficient, the regulator stated.
Under the recovery plan, the banks are required to set out measures to make sure their stability in a crisis and be capable of proceeding with their operations without government interference.
UBS and Credit Suisse have made considerable development in their international resolution plans, which would make it easier to wind them up.
The two banks have, for instance, created holding structures and Swiss subsidiaries to make it easier for them to be disentangled, FINMA stated.