(AWP) The Swiss Financial Market Supervisory Authority Finma has adjusted the circular on liquidity risks at banks. Finma announced on Thursday that the “selective” adjustments were made to the introduction of the financing quota decided by the Federal Council.
The amended Finma circular 2015/2 “Liquidity Risks – Banks”, like the Federal Council resolution on the financing quota, will come into force on July 1, 2021, the supervisory authority continued. For this purpose, the concerns of various hearing participants were taken up earlier in the year as part of a hearing.
In September the Federal Council completed the amendment to the Liquidity Ordinance for banks. According to this, Swiss banks have to meet a long-term financing quota, the so-called “Net Stable Funding Ratio”. In the ordinance, the federal government sets guidelines for the financing of loans and wants to prevent banks from financing long-term loans to a large extent with funds that are only available to them for a short time.
The shorter-term a bank finances a long-term loan, the higher the risk of losses. If interest rates rise unexpectedly, the banks’ financing costs rise, but not their income from lending rates. The federal government intends to limit this interest rate risk with the new quota and thus improve the stability of the financial system.
A majority of Swiss banks already meet the quota according to a Federal Council report. Of almost 300 banks subordinate to Finma, only 17 had an NSFR underfunding at the end of 2019. This did not include any of the systemically important banks UBS (UBSG 12.40 -1.47%), CS, ZKB, Raiffeisen and Postfinance.
– .
