SBA position on the interim report of the Committee of Experts on economic risk limitation by large companies

  • The SBA recognises the need to take action in relation to the "too big to fail" issue, or systemic stability, and remains committed to a constructive dialogue.
  • We also agree in principle with the proposed definition of systemic stability. However, it is necessary to reconsider the extent to which global insurance companies are also relevant to the system – especially in relation to bancassurance business models.
  • In terms of regulatory responses to the financial crisis, the following factors are of fundamental importance: differentiation, level playing field, cost/benefit analysis, integrated examination and consideration of impacts on the real economy.
  • We also endorse the fact that the interim report has clearly rejected any measures that would interfere with bank business models ("narrow banking", direct size restrictions, ban on proprietary trading). The SBA also welcomes the fact that tax solutions have been assessed critically, and should only be considered in the context of global solutions. It also believes it is appropriate that banks have the option to maintain the proven "full service bank" model.
  • The SBA approves the Committee of Experts' systematic approach in evaluating alternative measures based on specific economic and legal criteria. In particular, the SBA supports the Committee of Experts' view that adequate consideration should be given to international standards in configuring applicable measures.
  • The SBA expects both FINMA and the SNB to use their potential new powers carefully to enable the Swiss financial sector to continue leveraging growth opportunities for the benefit of Switzerland and the Swiss economy.
  • Convertible bond and contingent capital instruments may help to ease the problem of systemic risks. In this context, appropriate regulatory treatment (eligibility as capital) will be absolutely crucial.
  • In principle, the SBA also supports adjustments to macroprudential regulation and supervision (to supplement microprudential supervision by individual banks). However, the practicability and limits of relevant measures directly aimed at protecting entire financial systems, and their relationship to macroeconomic trends (the economy), are largely undecided at present.
  • The SBA reads the interim report as a provisional report and welcomes the Committee of Experts' commitment to investigating the various options with a view to producing a final report in the autumn.
  • It is essential that the alternative solutions put forward by the Committee of Experts are compared systematically and assessed carefully. This will require a systematic overview, as already proposed by the Committee of Experts.