FINMA Introduces New Guidelines for Swiss Banks
In an effort to strengthen the stability and integrity of Switzerland’s banking sector, the Financial Market Supervisory Authority (FINMA) has introduced new guidelines for Swiss banks. These guidelines aim to ensure that banks operate in a prudent and responsible manner, while also promoting transparency and good corporate governance.
Proper Business Conduct Requirement
Under the new guidelines, any individual or entity seeking to acquire a qualified participation in a Swiss bank must guarantee that the influence they will gain will not be used to compromise the bank’s proper management. To ensure compliance with this requirement, banks must provide FINMA with certain documents and indications, as outlined in Article 8 of the Banking Ordinance.
Key Requirements
- Guarantee that influence gained will not compromise the bank’s proper management
- Provide FINMA with specific documents and indications
Banks Under Foreign Control
The guidelines also address the issue of foreign control over Swiss banks. If a Swiss-controlled bank is acquired by foreigners, or if there is a change in the ownership structure that results in foreign control, an additional licence must be obtained from FINMA. The granting of this licence is subject to certain conditions, including reciprocity guarantees and compliance with corporate governance requirements.
Key Requirements
- Obtain additional licence from FINMA
- Reciprocity guarantees and compliance with corporate governance requirements
Corporate Governance Requirements
Swiss banks are required to comply with specific corporate governance requirements, as outlined in the Banking Act and Ordinance, as well as FINMA circulars. These requirements include:
Key Requirements
- Board of directors comprising at least three members, with a third being independent
- Audit committee and risk committee, comprised of a majority of independent board members
- Compensation and nomination committee for systemically important institutions
Registration and Oversight of Senior Management
The guidelines also set out requirements for the registration and oversight of senior management. This includes:
Key Requirements
- Adequate management expertise and specialist knowledge among board members
- Sufficient diversity on the board to ensure representation of key aspects of the business
- Regular assessment of board performance
- Good reputation and proper business conduct among all members of the board and executive management
Remuneration Requirements
The guidelines also introduce new remuneration requirements, including:
Key Requirements
- Compensation system for independent control bodies that is transparent and aligned with the bank’s interests
- Ban on variable remuneration for senior managers in banks under foreign control
- Regular review and approval of remuneration policies by the board of directors
Conclusion
These new guidelines are designed to promote good corporate governance, transparency, and responsible banking practices in Switzerland. They will come into effect [insert date] and apply to all Swiss banks operating within the country. By implementing these guidelines, FINMA aims to strengthen the stability and integrity of the Swiss banking sector, ensuring a safer and more secure financial environment for both customers and investors.