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FINMA Reveals Guidelines on Qualified Participants in Swiss Banks

Zurich, Switzerland - The Swiss Financial Market Supervisory Authority (FINMA) has released new guidelines outlining the requirements for qualified participants in Swiss banks. According to FINMA, any individual or entity seeking to hold a qualified participation in a bank must ensure that their influence will not be used to undermine the prudent and proper management of the institution.

Proper Business Conduct Requirement

To comply with this requirement, individuals and entities acquiring a qualified participation must provide certain indications and documents to FINMA as set forth in Article 8 of the Banking Ordinance. These documents include:

  • Information on whether the participation is being acquired for personal account or on a fiduciary basis
  • Any options or similar rights that will be granted on the participation

Banks Under Foreign Control

If a Swiss-controlled bank passes under foreign control due to the acquisition of a participation, it must obtain an additional license from FINMA. This is also the case if there is a change in a qualified participation held by a foreigner in a foreign-controlled bank.

A bank is considered to be under foreign control if:

  • Foreigners holding qualified participations directly or indirectly hold more than half of the voting rights
  • The bank is controlled in any other way by foreigners

The granting of an additional license is subject to certain conditions, including reciprocity between Switzerland and the countries where the foreigners have their domicile or registered office.

Corporate Governance Requirements

FINMA has also released guidelines on corporate governance requirements for Swiss banks. These include:

  • Requirements for the board of directors
  • Executive management
  • Risk management framework
  • Internal control system
  • Internal audit function

Registration and Oversight of Senior Management

The guidelines emphasize the importance of registering and overseeing senior management, including:

  • The board of directors
  • Executive management

Members of these bodies must have:

  • Adequate management expertise
  • Specialist knowledge and experience in the banking and financial services sector

Remuneration Requirements

FINMA has also outlined remuneration requirements for banks, including a compensation system for independent control bodies. According to FINMA, remuneration policies should be designed to promote sustainable risk-taking and align with the bank’s overall business strategy.

These guidelines are aimed at ensuring that Swiss banks operate in a prudent and proper manner, and that qualified participants in these institutions adhere to high standards of corporate governance and conduct.