Depositor protection, supervision and too big to fail

From 1934 to FINMA

Federal banking supervision began two decades after the Ticinese crash. A first federal banking bill was drafted in 1916 and then shelved. It was revived only when the collapse of the Banque de Genève in 1931 and the rescue of the Swiss Volksbank in 1933, which required CHF 100 million of federal support, made legislation unavoidable. The Banking Act of 8 November 1934, which a later finance minister called a "daughter of necessity", entered into force on 1 March 1935. It created the Federal Banking Commission, an independent body of five members whose task was to protect creditors through requirements on liquidity and capital.¹ The same act introduced a privilege in bankruptcy for savings deposits, which the depositors of 1914 had lacked.² The Federal Banking Commission supervised Swiss banks until 31 December 2008. On 1 January 2009 it was merged with the Federal Office of Private Insurance and the Anti-Money Laundering Control Authority into the Swiss Financial Market Supervisory Authority, FINMA.³

The Ticinese experience of 1914 contains in compressed form most of the risks that this supervisory system was later designed to address: related-party lending, insufficient capital, liquidity mismatch, concentration in foreign and speculative assets, conflicts of interest of directors and the absence of any mechanism to protect small depositors. Chapter D.III describes how a later crisis in Ticino, the Chiasso scandal of 1977 at the branch of the Schweizerische Kreditanstalt, led to the first agreement on the due diligence of banks. The history of Swiss banking regulation can be read as a series of responses to crises, and two of them occurred in Ticino.

Deposit insurance under Articles 37a–37k BankA

Today a depositor in a Swiss bank enjoys two layers of protection that did not exist in 1914. The first is the privilege in bankruptcy. Under Article 37a of the Banking Act, deposits held in the depositor's name are assigned to the second class of creditors under Article 219(4) of the Debt Enforcement and Bankruptcy Act up to a maximum of CHF 100,000 per creditor. Banks must permanently hold domestic claims or other assets located in Switzerland equal to 125 per cent of their privileged deposits (Article 37a(6) BankA). Privileged deposits booked at Swiss offices are paid out immediately from the bank's available liquid assets, outside the schedule of claims (Article 37b BankA).⁴

The second layer is the deposit insurance scheme organized by the banks themselves. Under Article 37h BankA, banks must ensure the protection of privileged deposits by joining a self-regulatory scheme. The scheme is operated by esisuisse, an association of banks and securities firms. At the end of 2025 it had 251 members: 225 banks, 19 securities firms and seven institutions winding up their business.⁵ The amendment of the Banking Act that entered into force on 1 January 2023 strengthened the scheme in three ways. The total contribution obligation of the members was set at 1.6 per cent of the sum of insured deposits, with a minimum of CHF 6 billion (Article 37h(3)(b) BankA). Each bank must secure half of its contribution obligation permanently by depositing securities or cash with a custodian (Article 37h(3)(c) BankA). The deadline for payment by the scheme to the liquidator was reduced from twenty to seven working days. The liquidator in turn must pay depositors no later than the seventh working day after receiving instructions (Articles 37i and 37j BankA).⁶ 1914 2025/2026 Deposit None CHF 100,000 per client and bank (esisuisse) insurance Privilege in None Second class up to CHF 100,000 (Art. 37a bankruptcy BankA) Pre-funded None CHF 4.0 billion secured, system limit CHF resources 8.0 billion Payout deadline Years of Seven working days (Arts. 37i–37j BankA) liquidation Supervisor None FINMA State guarantee None (Banca Full, subsidiary (BancaStato, Art. 4 cantonal Cantonale law) Ticinese)

Sources: as cited in this section and in the preceding one.

The figures of esisuisse show the scale of the protection. At the end of 2024, protected deposits in Switzerland amounted to CHF 497.4 billion. The system limit for the contribution obligation stood at CHF 8.0 billion at the end of 2025, of which CHF 4.0 billion had to be secured.⁷ The scheme is designed for the failure of a small or mediumsized bank. It cannot absorb the failure of a large bank, whose protected deposits would far exceed its resources. For that case Swiss law relies on a different set of instruments.

Notes

1. Bruppacher, "La vigilanza sulle banche in Svizzera" (as above). ↩
2. Banking Act of 8 November 1934, Art. 15. In the current text only para. 1 remains, paras 2 and 3 having been repealed by the Federal Act of 16 December 1994 amending the Debt Enforcement and Bankruptcy Act, in force since 1 January 1997 (AS 1995 1227), https://www.droit-bilingue.ch/de-fr/9/95/952.0-15-43.html. ↩
3. Bruppacher (as above). ↩
4. Banking Act, Arts. 37a and 37b, quoted in esisuisse, Übersicht relevanter Rechtstexte zur Einlagensicherung, June 2023, https://esisuisse.ch/media/files/6A236Z2H/Ubersicht_relevanter_Rechtstexte_zur_Einlagensiche rung-V102.pdf; FINMA, "Depositor protection at banks and securities firms", https://finma.ch/en/enforcement/recovery-and-resolution/investor-and-creditor-protection/ depositor-protection-at-banks-and-securities-firms. ↩
5. esisuisse, Geschäftsbericht 2025 , 8 May 2026, https://www.esisuisse.ch/media/files/33P33IL1/20260508-Geschaeftsbericht_esisuisse-2025-V100.pdf. ↩
6. esisuisse, Übersicht relevanter Rechtstexte (as above); LAWMEDIA Redaktion, "Einlegerschutz zugunsten der Bankkunden – ein Update", law.ch, 29 July 2022, https://law.ch/2022/07/einlegerschutz-zugunsten-der-bankkunden-ein-update (shortening of the payout deadline from 20 to 7 days). Banking Act, Art. 37h (version of the Federal Act of 17 December 2021, in force since 1 January 2023, AS 2022 732), https://www.droit-bilingue.ch/de-fr/9/95/952.0-37h-89.html, and Art. 37j, https://www.droit-bilingue.ch/de-fr/9/95/952.0-37j-91.html ("spätestens aber am siebten Arbeitstag"). ↩
7. esisuisse, Geschäftsbericht 2025 (as above). ↩

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 August 2025.