Recovery and resolution

Systemically important banks, financial market infrastructures and large insurance companies are required to draw up a recovery plan and prepare for possible insolvency measures ordered by FINMA (resolution).

FINMA authorises and monitors financial institutions such as banks, insurance companies and financial market infrastructures. Monitoring is also intended to minimise the likelihood of these companies becoming financially unstable. This applies in particular to institutions that are so important to the financial system that their disorderly exit from the market would have serious macroeconomic consequences. If such an institution nevertheless becomes destabilised, FINMA supports the institution in stabilising itself again through recovery measures. FINMA takes measures if there is a risk of imminent insolvency, for example due to overindebtedness or serious liquidity problems. This may, for example, involve a temporary halt to disbursements. If there is a reasonable prospect of success, FINMA may launch a restructuring procedure to bolster the institution’s balance sheet and restructure its business model. If there is no reasonable prospect of success, FINMA places it into bankruptcy.

These measures are to be anticipated and prepared for by drawing up effective recovery and resolution plans. FINMA plays a central role here: it develops the resolution plans and approves the recovery plans of the institutions concerned.