The Swiss Financial Market Supervisory Authority FINMA has opened the consultation on the complete revision of the Banking Insolvency Ordinance. This revision was deemed necessary as a result of the foreseen amendments to the Swiss Banking Act: on 1 September 2011, the deposit protection scheme bill entered into force, while the new provisions of the "too-big-to-fail" bill should come into effect during this year. The new Banking Insolvency Ordinance shall specify the statutory rules on restructuring banks and applies to all banks and securities dealers. The consultation will end on 2 March 2012.
On 1 September 2011, important new provisions on bankruptcy and restructuring laws prescribed in the Banking Act entered into force. In the course of this year, various parts of this Act will be amended as part of the "too-big-to-fail" bill. The current draft ordinance will implement the generally held provisions in more detail at the legislative level, giving due consideration to the amendments to the Banking Act stemming from both draft versions. The Bank Bankruptcy Ordinance (BBO-FINMA) of 30 June 2005 is to be renamed "Ordinance on the Insolvency of Banks and Securities Dealers (BIO-FINMA)".
In terms of content, major focus is on the detailed regulation of restructuring proceedings and the restructuring plan. A new innovation is that in an insolvency case it is not just only possible to restructure the entire bank, but, more importantly, FINMA can also ensure that individual essential banking services are transferred to other legal entities to protect the financial system and the economy. In order to obtain the capital required for restructuring, FINMA will be given new instruments: in particular, it will be able to trigger debt-to-equity swaps and statutory bail-ins. Also worthy of mention is that, in certain cases, FINMA may use the legal provision of temporarily suspending existing contractual termination rights of the bank’s counterparties. Other changes to the Act aim to result in quick and efficient proceedings, tailored to the individual cases. This draft version complies, to a large extent, with the international rules of the Financial Stability Board.
Contact
Tobias Lux, Media Spokesperson, phone +41 (0)31 327 91 71,
tobias.lux@finma.ch
