2023-09-06 10:49:12
Several conditions
The PLB intervenes when a bank no longer has sufficient liquidity to meet its financial obligations. Or if the establishment can no longer benefit from extraordinary aid loans granted by the Swiss National Bank (SNB), for lack of sufficient collateral.
Also Read: Credit Suisse Fall Reveals ‘Too Big To Fail’ Regulatory Loopholes
The PLB then allows the SNB to make available additional liquidity guaranteed by the State. This instrument should help to build confidence among investors and customers even in the event of a crisis. The amount of the guarantee is determined on a case-by-case basis.
The granting of aid loans in the form of liquid assets accompanied by a guarantee must be subject to various conditions: subsidiarity of the aid, initiation of a reorganization procedure, solvency of the bank, public interest and proportionality of the state intervention.
Advance due
The project was mostly well received in consultation, notes the government in a press release. To respond to a widely expressed request, the PLB will however be supplemented by a lump sum that the large banks will have to pay in advance to the Confederation.
Also read: Andréa Maechler: “The SNB is not there to save a bank”
This package will make it possible to offset the risk incurred by the Confederation and to reduce distortions of competition. It will be due in all cases, whether or not a PLB has been granted. The banks concerned will also have to pay premiums and interest.
Shared parties
If the cantons and the banks were satisfied during the consultation, the parties are more divided. The PLR and the PVL approve the project, the Center and the PS have reservations on certain points. The SVP believes that this is on the wrong track, as the project consolidates a safety net funded by taxpayers. The Greens criticize the lack of more restrictive rules for banks and the perpetuation of a system that is too risky.
Parliament will now have to consider the matter. In parallel, the overall assessment of the “too big to fail” regulations continues. The Federal Council will publish a report in the spring of 2024.
Four systemically important banks
In the case of Credit Suisse, bought by UBS for 3 billion francs, the Confederation provided its guarantee for 109 billion francs made available to the two banks, including 100 billion in the form of a PLB. In addition to these state guarantees, the SNB had already advanced 150 billion francs of additional liquidity, aid not guaranteed by the state.
Read also: Heinz Huber, boss of Raiffeisen: “Abroad, it is believed that Switzerland has handled the Credit Suisse crisis well”
UBS announced in August that it was abandoning the support measures put in place by the Confederation and the SNB to facilitate the takeover of Credit Suisse. These brought in revenue to the Confederation of around 200 million francs, according to the Federal Department of Finance.
After the integration of CS by UBS, Switzerland still has four systemically important banks: UBS, Zürcher Kantonalbank, Raiffeisen and PostFinance.
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