Legacy: TBTF in a two-bank and then a one-bank financial centre

From two banks to one

When the Banking Act was amended in 2011, the TBTF regime addressed two banks of broadly comparable size, each with its head office in Zurich. The existence of two big banks had a stabilising effect that was rarely articulated at the time. If one failed, the other could in principle take over its Swiss business, its clients and its staff. The merger of March 2023 used exactly that possibility, thereby removing it for the future. The financial centre now depends on a single global bank, whose failure could not be absorbed by a domestic competitor of comparable size. The Parliamentary Investigation Committee pointed to this concentration when it called for stricter regulation and internationally coordinated crisis planning for the merged UBS.¹

The one-bank situation shifts the emphasis of the regime. Resolution must work for UBS in a wider range of scenarios. The authorities have indicated that restructuring through bail-in, wherever possible, remains the baseline for dealing with an impending bankruptcy.² FINMA’s assessment of UBS published on 25 September 2025 found that the bank had made further progress in its resolvability and that resolution remained feasible. FINMA considered that UBS could at that time be recapitalised and resolved using the single point of entry bail-in strategy, but that its emergency plan, although largely meeting the statutory requirements, could not yet be regarded as executable. It also supported the expansion of the crisis management toolbox to include solvent market exits and forced sales, subject to legislative changes to remove legal uncertainties.³ A year earlier FINMA had suspended its approval of UBS’s recovery and emergency plans because the integration of Credit Suisse had created obstacles to resolvability. It had asked UBS to take account of the speed and extent of deposit withdrawals observed during the crisis.⁴

Capital for foreign participations and the state of play in September 2026

The most contested legislative consequence of the crisis is the proposal to require systemically important banks to back their participations in foreign subsidiaries fully with common equity tier 1 capital. On 22 April 2026 the Federal Council adopted a dispatch to amend the Banking Act accordingly, with a transition period of seven years. According to the authorities, UBS would need about USD 20 billion of additional CET1 capital, which would raise its group CET1 ratio by 1.1 percentage points to about 15.5 per cent. At the same time the Federal Council adopted amendments to the Capital Adequacy Ordinance, in force from 1 January 2027, which it had scaled back after the consultation. The SNB and FINMA described the package as appropriate, necessary and targeted, as well as manageable for UBS.⁵ On 12 August 2026 the Federal Council opened a further consultation on amendments to the Banking Act and the Liquidity Ordinance.⁶ The parliamentary debate on these measures, the reaction of UBS and the wider question of whether the bank will remain headquartered in Zurich are discussed in chapter G.VI.

The proposal shows how far the regime has moved from its origins. In 2010 the expert commission rejected size limits and structural separation and relied on capital, liquidity and planning. In 2026 the authorities are still relying on the same three instruments, but they apply them with a new emphasis on the individual legal entity and on the parent bank, where the Credit Suisse crisis revealed the weakest link. The underlying logic has not changed. The regime continues to accept that Switzerland will host a bank that is very large in relation to its economy, while attempting to make that bank so resilient, and so easy to resolve, that the state will never have to rescue it.

What TBTF means for Zurich

For the Zurich financial centre, the TBTF regime has had consequences that go beyond the balance sheets of the designated banks. It created a new body of law and practice, with its own vocabulary of going concern and gone concern, triggers and bail-in bonds, emergency plans and resolvability assessments. Besides generating work for lawyers, auditors and consultants, it changed the legal organisation of the big banks in ways that remain visible in the commercial register. It made the Swiss National Bank a regulatory actor and turned FINMA into a resolution authority. It also shaped Zurich’s reputation abroad. For a decade Switzerland presented its regime as a model, and international bodies largely accepted that claim. The events of 2023 damaged that reputation without destroying it, because the authorities managed to stabilise the situation within a weekend and the regime’s gone-concern capital remained intact.

The practitioner who advises clients in Zurich today encounters the regime in several forms. Institutional investors ask about the position of bail-in bonds and additional tier 1 instruments after the Credit Suisse write-down and read the terms and conditions of new issues with a care that was rare before 2023. Counterparties of the systemically important banks negotiate contractual clauses that recognise the stay and bail-in powers of FINMA, so that foreign courts will respect a Swiss resolution. Clients of the banks, including wealthy private clients from abroad, want to know what would happen to their deposits and securities in a crisis, which brings the rules on segregation of custody assets and on deposit protection into ordinary client advice. For sophisticated international investors, including clients from Asia, the question of how a Swiss bank would be resolved has become part of the due diligence they conduct before entrusting assets to a Swiss institution.

Notes

1. Blick, “Die zehn wichtigsten Erkenntnisse der PUK zum Ende der Credit Suisse” (as above). ↩
2. Federal Department of Finance, “Questions and answers – TBTF report”, https://www.efd.admin.ch/en/faq-tbtf. ↩
3. FINMA, press release “UBS resolution report”, 25 September 2025, https://www.finma.ch/en/news/2025/09/20250925-mm-resolution-bericht-ubs/. ↩
4. FINMA, press release “UBS resolution reporting: recovery and emergency plans to be revised”, 15 October 2024, https://www.finma.ch/en/news/2024/10/20241015-mm-resolutionberichterstattung-ubs/. ↩
5. Federal Council, press release “Too-big-to-fail regulations: Federal Council adopts dispatch and Capital Adequacy Ordinance”, 22 April 2026, https://www.admin.ch/en/newnsb/_9e8qd5sXEzLww7dK3H_9. ↩
6. SIF, “Systemically important banks” (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 September 2025.