Financial institutions with a banking or securities dealer licence can benefit from supervision categories 4 and 5, and currently over 200 such institutions are subject to FINMA supervision. These include cantonal and regional banks, private banks, securities dealers and asset management banks. These institutions may request exemptions under the small bank regime, provided they have high liquidity and are highly capitalised.
The small bank regime provides that such banks and securities dealers are relieved of supervisory requirements. The aim is to increase the efficiency of regulation and supervision for small, well-secured financial institutions. To ensure that the security and stability of small banks are not jeopardised, the institutions are given a regulatory regime, for example at the level of the Capital Adequacy Ordinance, which is far less complex than the previous supervisory requirements. Following the launch of the idea for the small bank regime in 2017, the new procedure was successfully tested at 68 institutions in a pilot phase lasting several months.
Following a hearing on the partial revision of the eight FINMA circulars, the regime for small banks has now been definitively implemented as of 1 January 2020. FINMA has received a great deal of positive feedback on the new regulation from the institutions involved and the participants in the consultation process and, in line with the new regime for small banks, has adapted the Circular to define the new regulation. The adapted FINMA Circulars can be found below.
The eight updated FINMA Circulars reveal, among other things, the following facilitations for small banks:
The FINMA Circulars 2017/07 Credit Risk - Banks (in German) and 2019/01 Risk Diversification - Banks (in German) have also been updated with regard to the small bank regime.
In accordance with its media release of 27.11.2019, FINMA will provide banks and securities dealers in supervisory categories 4 and 5 with written information on the further procedure and registration process for the regime for small banks.
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