July 1, 2025

01.07.2025, Enrico Giacoletto

The aim of this post is to briefly outline the main Swiss regulatory changes impacting banks and financial institutions in mid-2025. We'll start with a few useful reminders of the key deadlines of recent months. We will then review the new regulatory announcements that have marked the second quarter of 2025.

I. Status and progress on current regulatory projects

In this chapter, we will look in more detail at the following topics:

• FINMA Circular 2023/01 "Operational risks and resilience - banks".
• Circular FINMA 2025/02 "Rules of conduct under the LSFin and OSFin".
• Basel III Final: first reporting

I.1 Operational resilience

FINMA Circular 23/01 "Operational Risk and Resilience - Banking" is a major multi-year regulatory initiative, which we have already discussed here.

By 2025, banks must complete implementation of the circular's operational resilience provisions and take steps to ensure operational resilience.

Banking institutions have already had to draw up and implement framework documentation for operational resilience. This includes the operational resilience policy, the list of critical functions, and interruption tolerance thresholds for each of these functions. A report to the Board of Directors is now in place (except for banks participating in the small bank regime).

Finally, from this year onwards, the largest establishments (category 1 to 3 banks) must draw up crisis scenarios relating to operational resilience. The aim is to establish "severe but plausible scenarios" directly related to the bank's critical functions. These scenarios take into account the combined loss of key resources required to perform these functions, or their unavailability for an extended period (beyond the usual parameters of Business Continuity Management). These establishments will then have to plan tests (cm 110) to be defined according to the type of scenario selected.

For further information and detailed illustrations of regulatory requirements and best practice in operational resilience, please visit this link.

I.2 FINMA Circular 2025/02 "Rules of conduct in accordance with the LSFin and OSFin".

As of June 30, 2025, the transitional period of FINMA circular 2025/02 having expired, the following requirements are fully in force:

• Monitoring unusual risk concentrations (cm 9 - 12) ;
• Quarterly loss indicators for Contracts for Difference, CFDs (cm 8) ;
• Provisions to prevent conflicts of interest (cm 24, 25); and
• Information on remuneration received (retrocessions, cm 26).

These provisions were the subject of a detailed analysis in our post of the last quarter of 2024, which you can find by following this link.

I.3 Basel III Final: initial reporting

Alleviated or delayed in several other countries, the Basel III Final capital calculation and reporting system will now be in place for banks in Switzerland from March 31, 2025.

The detailed implications of Basel III Final were analyzed in greater depth in our September 2024 ISFB post. You can find more information on Basel III Final in that post by following this link, or in the resources available on the easyReg website.

II. New regulatory announcements in the second quarter of 2025

In this chapter, we will look in more detail at the following topics:

• Capital, systemic risk and TBTF ("Too Big To Fail");
• Consolidated supervision of financial groups (FINMA circular 2025/04) ;
• Real estate and mortgage risk management (FINMA communication 02/2025).

II.1 Federal Council announcements of June 6, 2025 in connection with the emergency merger of Credit Suisse

At its meeting of June 6, 2025, in the context of the emergency merger of Credit Suisse and the measures concerning systemic banks, the Federal Council adopted a package of measures based on its report of April 10, 2024 and that of the CEP. The Banking Act will be amended to implement certain measures (the draft is not yet out for consultation). The key measures announced aim to :

• Establish a new "accountability regime" requiring banks to document their decision-making processes and hold individuals accountable for their actions. This includes potential sanctions, such as the clawback of variable remuneration already paid, and the restriction of blocked bonuses not yet paid.
• Extend Swiss banks' access to liquidity: the Swiss National Bank (SNB) will have extended capacity to provide liquidity to banks in need. Legal changes are underway to require systemically important banks to prepare liquidity withdrawal plans backed by collateral. The aim is to prepare for the operational management of possible crises, and better anticipate cases requiring SNB assistance.
• Strengthen FINMA's role and powers: FINMA's supervisory powers have been considerably extended. Of particular note is the Authority's ability to impose financial sanctions (fines).
• Updating stability and liquidation plans: regulations on bank stability and liquidation plans will be updated. In particular, FINMA will be able to order corrective measures and introduce liquidation procedures.

In parallel, and still on the same theme of financial system stability, several changes to the Capital Adequacy Ordinance (OFR) were put out to consultation by the FDF on June 6. These changes are designed to implement several of the measures proposed in the Federal Council's report on bank stability and the report of the parliamentary commission of inquiry.

These new provisions will include the following points:

• Deferred tax assets: these must now be deducted in full from regulatory capital;
• Amortization of software: obligation to deduct the full value of software assets from capital;
• Prudent valuation principles: stricter implementation measures; and
• Other measures, including those concerning AT1 capital instruments, will be introduced.

Several of the regulatory changes announced on June 6, 2025 require updates to the Banking Ordinance (OB) and the Liquidity Ordinance (OLiq). Amended versions of these texts are also available for consultation.

II.2 Circular 2025/04 and consolidated supervision of financial groups

On March 19, FINMA published the new circular 2025/04 on the consolidated supervision of financial groups under the BL and LEFin.

The new circular came into force on July 1, 2025. It formalizes and makes transparent FINMA's practice in this area (which was previously not public). The Authority clarifies its expectations regarding its supervisory practice. It also provides all the information needed to define the scope and content of consolidated supervision.

This new circular concerns financial groups and conglomerates, as well as banks that are part of a financial group or conglomerate (and other similar situations).

II.3 Real estate and mortgage risks

On May 22, 2025, FINMA published communication FINMA 02/2025 entitled "Risks in the real estate and mortgage markets". In it, FINMA explains that risks in the real estate and mortgage markets remain heightened in several segments. It also clarifies its expectations and recalls a number of regulatory requirements already applicable to mortgage transactions on the basis of its supervisory activities. In particular, the Authority stresses the need to improve internal regulations governing the granting of mortgage loans.

FINMA also reminds us that banks must ensure through "internal directives that the borrower's debt capacity is systematically and durably guaranteed for the loans granted". It notes that a significant proportion of loans are granted outside the financial capacity criteria defined by the banks themselves (Exception To Policy; ETP). It is obviously very important that banks correctly identify Exception To Policy cases, and that these are properly monitored and reported.

You can find previous editions of this post on the ISFB website by following this link.

Enrico Giacoletto, CFA, FRM

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