FINMA strives to regulate in a manner that is both proportionate and distinguishes appropriately between different risks and business types. One important milestone is the small banks regime. This aims to reduce the complexity of regulation and supervision for small and particularly solid institutions. These institutions are exempted from certain supervisory requirements if they have well above-average capitalisation and strong liquidity positions.
To introduce the small banks regime on a permanent footing, the Federal Council’s Capital Adequacy Ordinance first needed to be amended. Secondly FINMA revised various circulars based on this. The revised circulars entered into force on 1 January 2020 and the pilot has thus been transferred over into the new regulatory regime. Furthermore, all audit programmes and criteria except those relating to suitability and money laundering have been revised. This ensures that the requirements in the audit programmes do not go beyond those in FINMA’s circulars.
The various quantitative and qualitative exemptions should mean a saving in both direct and indirect costs and opportunity costs for institutions within the small bank regime and possibly even for all institutions in Supervisory Categories 4 and 5.
The small banks regime makes Swiss financial market regulation a leader in its field as regards proportionality.
(From the Annual Report 2019)