Cantonal banks and the State guarantee today

Article 3a of the Banking Act

The lesson of 1914, that a bank bearing the name of the canton should be backed by the canton, shaped Swiss banking law for most of the twentieth century. Until 1999 a cantonal bank was defined by the State guarantee of its liabilities. The revision of the Federal Act on Banks and Savings Banks that entered into force on 1 October 1999 changed the definition. Under Article 3a of the Banking Act a cantonal bank is a bank established by a cantonal legislative act as an institution or as a company limited by shares, in which the canton holds more than one third of the capital and of the voting rights. The canton may assume full or partial liability for the bank's obligations.¹ The State guarantee thus ceased to be a defining element and became an option. A canton may today own a cantonal bank without guaranteeing it, guarantee it only in part, or guarantee all its liabilities as Ticino does.

The change reflected the experience of the 1990s. The real estate crisis at the beginning of that decade caused heavy losses at several cantonal banks. The Historical Dictionary of Switzerland mentions the crises of the Bern cantonal bank in 1992 and of the Geneva cantonal bank in 2000, as well as the partial privatization or dissolution of the cantonal banks of Solothurn and Appenzell Ausserrhoden.² In Bern the sound bank was separated in 1993 from a newly founded Dezennium-Finanz AG, and the canton supported the restructuring over the following years with a total of CHF 1.45 billion. In Solothurn the cantonal bank, weakened by its own legacy losses, including business with the financier Werner K. Rey, and by the takeover of an ailing bank in Kriegstetten, was stabilized with public funds and then sold to the Swiss Bank Corporation, which ran it as Solothurner Bank SoBa.³ These cases showed that the State guarantee did not prevent bad management and that its cost could fall on the taxpayer. The number of cantonal banks fell to 24 by 1999, of which 16 were pure State banks and eight mixed institutions. Their share of the Swiss market had declined from about a third of all savings before the First World War and half in the 1940s to about a third in 1999.⁴

The law on BancaStato

The Banca dello Stato del Cantone Ticino is governed today by the cantonal law of 25 October 1988, which replaced the law of 6 May 1915 and has been amended several times, most recently in 2018.⁵ The law defines the bank as an autonomous institution with legal personality under public law (Article 2). Its purpose is to promote the economic development of the canton (Article 3). Article 4, headed "public mandate and State guarantee", contains the central sentence: "Lo Stato risponde di tutti gli impegni della Banca non coperti da mezzi propri", the State is liable for all obligations of the bank that are not covered by its own funds.⁶ The bank's capital consists of endowment capital provided by the State and of participation capital (Article 6). The law regulates the interest on the endowment capital (Article 7), the field of activity (Article 12), the organs (Articles 18–28), the approval of the accounts (Article 39), the distribution of net profit (Article 40) and liquidation (Article 42).⁷

The State guarantee in Article 4 is subsidiary. It covers liabilities to the extent that the bank's own funds are insufficient, which in practice means that creditors can call on the canton when the bank cannot pay. It is unlimited in amount and extends to all obligations, including deposits above the CHF 100,000 protected by the federal deposit insurance scheme. For a depositor of 1914 such a guarantee would have meant the difference between ruin and full repayment. For the canton it represents a contingent liability equal to the bank's balance sheet, which amounted to CHF 18.0 billion at the end of 2023.⁸

Notes

1. Federal Act on Banks and Savings Banks of 8 November 1934 (Banking Act, BankA), SR 952.0, Art. 3a, https://www.fedlex.admin.ch/eli/cc/51/117_121_129/de. Wording and history from Regierungsrat des Kantons Uri, Bericht und Antrag an den Landrat zur Revision des Gesetzes über die Urner Kantonalbank, 13 February 2001, https://www.ur.ch/_doc/35490 ("Als Kantonalbank gilt eine Bank, die aufgrund eines kantonalen gesetzlichen Erlasses als Anstalt oder Aktiengesellschaft errichtet wird"; in force since 1 October 1999). Full current wording checked at https://www.droit-bilingue.ch/de-fr/9/95/952.0-3a-11.html: "Der Kanton muss an der Bank eine Beteiligung von mehr als einem Drittel des Kapitals halten und über mehr als einen Drittel der Stimmen verfügen. Er kann für deren Verbindlichkeiten die vollumfängliche oder teilweise Haftung übernehmen." The article was inserted by the Federal Act of 18 March 1994 (AS 1995 246) and given its present wording by the Federal Act of 22 April 1999, in force since 1 October 1999 (AS 1999 2405). ↩
2. Froidevaux, "Banche cantonali" (as above). ↩
3. "Berner Kantonalbank", Wikipedia (German), https://de.wikipedia.org/wiki/Berner_Kantonalbank, and "Solothurner Kantonalbank", Wikipedia (German), https://de.wikipedia.org/wiki/Solothurner_Kantonalbank, both used as a last resort ("Der Kanton Bern unterstützte die Sanierung seiner Bank in den folgenden Jahren mit insgesamt 1,45 Milliarden Franken"). ↩
4. Froidevaux, "Banche cantonali" (as above). ↩
5. Legge sulla Banca dello Stato del Cantone Ticino of 25 October 1988, RL 960.100, https://m3.ti.ch/CAN/RLeggi/public/index.php/raccolta-leggi/pdfatto/atto/622; version history at https://lexaris.de/library/tableofcontents/267646 (amendments of 10 March 2003, in force 30 June 2004; 20 October 2010, in force 1 January 2011; 21 February 2018, in force 13 April 2018). ↩
6. Legge sulla Banca dello Stato (as above), Arts. 2, 3 and 4. ↩
7. Legge sulla Banca dello Stato (as above), table of contents and Art. 6. ↩
8. tio.ch, "«Risultati di portata storica»: 65 milioni di franchi per il Cantone", 14 March 2024, https://www.tio.ch/ticino/cronaca/1740778/bancastato-gruppo-chf-risultati-portata-cantone (balance sheet total CHF 18.0 billion). ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.