Designation by the Swiss National Bank

The two big banks

The transfer of the designation power to the Swiss National Bank gave the central bank a formal role in banking regulation that it had not possessed before. Its mandate to contribute to the stability of the financial system, laid down in the National Bank Act of 2003, had until then been exercised mainly through analysis, publications and the provision of liquidity. With the designation of systemically important banks, the SNB now took binding decisions with direct legal consequences for the institutions concerned. That UBS and Credit Suisse would be designated was never in doubt, since the expert commission had identified them by name in its interim report. Their formal designation by the SNB, after consultation of FINMA, followed once the new provisions and the Banking Ordinance had created the procedural framework.¹

The designation decision does more than place a bank in a category. Under Article 8 of the Banking Act, the SNB also determines which of the bank’s functions are systemically important. For the big banks these were essentially the domestic deposit and lending business and the payment transactions in Switzerland. The distinction between the systemically important functions and the rest of the bank is the foundation on which the emergency plan rests. It explains why the Swiss regime, unlike some foreign approaches, focused on the continuation of a clearly defined Swiss core, leaving investment banking, international wealth management and foreign subsidiaries to be restructured or wound down by other means.

The Zürcher Kantonalbank

The first designation that surprised the public concerned the Zürcher Kantonalbank. On 1 November 2013 the SNB designated the bank as a financial group of systemic importance, a decision announced on 11 November. The ZKB, fully owned by the canton of Zurich and benefiting from a cantonal guarantee of all its liabilities, was at the time the fourth-largest bank in Switzerland. The bank itself attributed the classification to its important role in the domestic deposit and lending business and its large market share in the canton. It expected its capital target to increase only moderately from the then current level of 13.6 per cent by 2016. Reports at the time mentioned that the cantonal government was considering an increase of the bank’s endowment capital by two billion francs.²

The designation of the ZKB raised a question that the legislator of 2011 had not addressed in detail: how does the TBTF regime apply to a bank whose liabilities are already guaranteed by the state? The logic of the regime is to remove the implicit guarantee. In the case of the ZKB, the guarantee is explicit and rests on cantonal law. The designation therefore did not change the ultimate risk for the canton of Zurich, which would stand behind the bank in any event. What it changed was the obligation to plan for continuity and to hold loss-absorbing capital in a form that could be used in a crisis. The later debate on gone-concern requirements for the domestic banks, discussed below, turned in part on this point. FINMA noted in its resolution reporting that the canton of Zurich provides a public guarantee for the ZKB’s non-subordinated liabilities and that the bank planned to close its capital gap by issuing bail-in instruments.³

Raiffeisen and PostFinance

The SNB designated the Raiffeisen Group as a financial group of systemic importance on 16 June 2014. The SNB stated that the regulatory consequences were primarily to be implemented by Raiffeisen, with FINMA acting in a subsidiary capacity.⁴ Raiffeisen posed a particular challenge for resolution planning because of its cooperative structure. The group consisted of more than two hundred legally independent cooperative banks linked to a central institution, so that FINMA would, in a crisis, have to merge entities before it could recapitalise the group.⁵

PostFinance followed on 29 June 2015, when the SNB declared the financial institution of the Swiss Post systemically important. The SNB referred to its significant role in the domestic deposit business and its leading position in Swiss payment transactions. At the end of June 2015, PostFinance held assets of about CHF 116 billion.⁶ With this decision the list reached five institutions, two global and three domestically oriented. The three domestic banks shared a feature that distinguished them from the big banks: all three had strong public or quasi-public ownership structures, a dense branch network and a business model concentrated on Swiss savers and borrowers. Their designation underlined that systemic importance in the Swiss sense did not depend on international activity. It depended on the role of the bank in the payment and credit circuits of the domestic economy.

The case of PostFinance proved the most difficult. Because the institution is wholly owned by the Swiss Post, which in turn belongs to the Confederation, and because it was for many years prohibited by law from granting mortgages and loans to third parties, its capacity to generate capital from its own earnings was limited. FINMA reported in 2022 that PostFinance’s recapitalisation in a crisis depended heavily on pending revisions of the Postal Organisation Act and on a temporary recapitalisation guarantee proposed by the Federal Council.⁷ In its assessment of the three domestic banks published on 28 August 2025, FINMA found that Raiffeisen’s emergency plan was ready for implementation for the first time, while PostFinance had to adopt a new strategy for its recapitalisation in an emergency.⁸

When Credit Suisse disappeared as an independent group in 2023, the list was reduced to four. FINMA now describes UBS, the Raiffeisen Group, the Zürcher Kantonalbank and PostFinance as the systemically important banks of Switzerland. It explains that they are large, closely interconnected and provide services that cannot be replaced at short notice.⁹ Three of the four have their head office or principal operations in Zurich or its immediate surroundings. Only PostFinance, headquartered in Bern, lies outside the city, and even Raiffeisen, with its seat in St. Gallen, maintains substantial operations in the Zurich region.

Notes

1. FINMA, “Switzerland’s ‘too big to fail’ regime for banks”, https://www.finma.ch/en/enforcement/recovery-und-resolution-n/das-schweizer-too-big-to-fail-konzept/banken/: “After consulting FINMA, the Swiss National Bank therefore designated these banks and their functions or services as systemically important.” On the entry into force of the revised provisions of the Banking Act on 1 March 2012 and their application to UBS and Credit Suisse, Federal Council, Rapport du Conseil fédéral sur les banques d’importance systémique, 20 June 2017, https://www.newsd.admin.ch/newsd/message/attachments/48923.pdf. ↩
2. The Local, “Zurich’s cantonal bank judged ‘too big to fail’”, 11 November 2013, https://www.thelocal.ch/20131111/zurichs-cantonal-bank-too-big-too-fail. The article’s statement that total assets amounted to about “150 million francs” is evidently an error for about CHF 150 billion. ↩
3. FINMA, Resolution Report 2022, “Focus on domestic systemically important banks”, https://www.finma.ch/en/enforcement/recovery-und-resolution-n/publikationen/resolution-report/archive/resolution-report/focus-on-domestic-systemically-important-banks/. ↩
4. Family Wealth Report, “Swiss National Bank Adds Raiffeisen To List Of Systemically Important Banks”, 13 August 2014, https://www.familywealthreport.com/article.php/Swiss-National-Bank-Adds-Raiffeisen-To-List-Of-Systemically-Important-Banks. The article records the ZKB designation of November 2013 as the preceding one. ↩
5. FINMA, Resolution Report 2022, “Focus on domestic systemically important banks” (as above). ↩
6. swissinfo.ch, “SNB names PostFinance fifth ‘too big to fail’ bank”, 29 June 2015, https://www.swissinfo.ch/eng/business/snb-names-postfinance-fifth-too-big-to-fail-bank/41635514. ↩
7. FINMA, Resolution Report 2022, “Focus on domestic systemically important banks” (as above). ↩
8. FINMA, “Resolution report”, overview page with the assessments of 28 August 2025 (domestic systemically important banks) and 25 September 2025 (UBS), https://www.finma.ch/en/enforcement/recovery-und-resolution-n/publikationen/resolution-report/. ↩
9. FINMA, “Switzerland’s ‘too big to fail’ regime for banks”, https://www.finma.ch/en/enforcement/recovery-und-resolution-n/das-schweizer-too-big-to-fail-konzept/banken/. ↩

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 September 2025.