The Federal Banking Commission from 1935 to 2009

A small authority with a growing mandate

The Federal Banking Commission began its work in 1935 with a mandate that its first president described as difficult. Schulthess told the members at their first meeting that their task would not be easy and that they would have to try with all their strength to preserve the Swiss banking system.¹ For three decades the Commission remained a small body, relying on the reports of the recognised audit firms and intervening in individual cases where banks ran into difficulties. Its supervisory philosophy was reactive. It did not seek to shape the structure of the banking market and left the management of banks to their boards, as long as the statutory requirements were met.

The mandate grew with every new field of financial activity that Parliament chose to regulate. The first major extension concerned investment funds. After a series of scandals involving real estate and securities funds in the early 1960s, the Federal Act on Investment Funds of 1966 placed fund management companies under the supervision of the Commission, which took up this task in 1967.² The general revision of the Banking Act in 1971 strengthened its position considerably by introducing the licensing requirement and the fit-and-proper test for bank managers, and by giving the Commission wider powers of intervention. The Chiasso scandal at the Kreditanstalt in 1977 exposed the limits of a supervisory system that relied almost entirely on external auditors and led to the due diligence agreement of the banks, the beginnings of Swiss anti-money-laundering practice that chapter F.V examines in detail.

The Federal Act on Stock Exchanges and Securities Trading of 1995 brought the stock exchanges and securities dealers under the Commission’s supervision and turned it into a general supervisor of the securities markets. In 2002 the Commission issued its own ordinance on the prevention of money laundering in the institutions under its supervision.³ By the end of its existence the Commission was responsible for the supervision of banks and securities dealers, investment funds, stock exchanges and the prevention of money laundering in its supervised sector, and it decided on the bankruptcy of financial institutions. It was an independent federal authority, administratively attached to the Federal Department of Finance, and maintained regular contacts with the Swiss National Bank and the industry associations.⁴

The Commission and banking secrecy

The relationship between the supervisor and banking secrecy was more complex than the formula of 1934 suggested. The Commission and its staff were bound by secrecy, while the construction of the dual system kept them at one remove from the files of individual clients. At the same time the Commission became, from the late 1970s onwards, the authority that enforced the due diligence obligations of the banks and their duty to know their clients. Its practice on the identification of beneficial owners, on dealings with politically exposed persons and on the return of illicit assets gradually transformed the meaning of discretion. A Swiss bank could still refuse to tell a foreign tax authority who owned an account, although it was now obliged to know the answer itself.

The Commission also became involved in the international conflicts over secrecy. In the cases of Ferdinand Marcos, Sani Abacha and other politically exposed persons, which chapter F.V examines, it investigated the conduct of banks that had accepted assets of dubious origin and published its findings. In the dormant accounts affair of the 1990s, discussed in chapter F.VI, it had to supervise a process in which the banks opened their records to international auditors on a scale that would have been unthinkable a few years earlier. Each of these episodes weakened the claim that banking secrecy was an absolute value, although each was presented at the time as an exception that confirmed the rule.

The end of the Commission

The Commission’s last year was dominated by the crisis of UBS. In October 2008 the Confederation and the Swiss National Bank had to support the largest Swiss bank with a stabilisation package. In February 2009 the supervisor ordered the transmission of client data to the United States authorities. The Federal Banking Commission was dissolved on 31 December 2008 after seventy-three years of activity. 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. In the foreword to the Commission’s last annual report its president Eugen Haltiner observed that a global banking crisis reigned also at the end of the Commission’s activities, as it had at their beginning. Together with its director Daniel Zuberbühler, Haltiner had led the Commission through the most difficult year since its foundation.⁵

The symmetry that Haltiner noted is striking. The Commission was born of the crisis of the 1930s, in which the Confederation had to save the Volksbank, and it ended in the crisis of 2008, in which the Confederation had to support UBS. Between the two lay seventy-three years in which the Swiss banking system grew from a regional industry shaken by its German losses into one of the largest financial centres in the world, with Zurich as its principal seat. The new authority that took over the Commission’s tasks, FINMA, has its seat in Bern and a large office in Zurich. Its history, and the story of the transfer of UBS client data that it ordered in its first weeks of existence, belong to Part G.⁶

Notes

1. Eidgenössische Bankenkommission, Jahresbericht 2008, p. 18, quoting Schulthess’s inaugural address of April 1935. ↩
2. Eidgenössische Bankenkommission, Jahresbericht 2008, historical overview, recording 1967 as the year in which the supervision of investment funds was added to the Commission’s mandate. ↩
3. Eidgenössische Bankenkommission, Jahresbericht 2008, historical overview, on the Stock Exchange Act of 1995 and the money laundering ordinance of the Commission (GwV-EBK) of 2002. ↩
4. Wikipedia (German), “Eidgenössische Bankenkommission”, https://de.wikipedia.org/wiki/Eidgen%C3%B6ssische_Bankenkommission, on the responsibilities and administrative position of the Commission. Wikipedia is cited here for orientation only. ↩
5. Eidgenössische Bankenkommission, Jahresbericht 2008, on the dissolution of the Commission on 31 December 2008 and the transfer of its tasks to FINMA on 1 January 2009, foreword of the president Eugen Haltiner, p. 19, and list of the Commission’s officers naming Daniel Zuberbühler as director. ↩
6. Guex, “Finanzplatz”, HLS (2003/2017), recording that FINMA disclosed thousands of names of alleged American tax evaders, all clients of UBS, to the American tax authorities. ↩

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.