FINMA Backs Banking Act Revision: What the TBTF Reforms Mean for Swiss Financial Firms
Switzerland's financial regulator has thrown its weight behind a significant overhaul of the Banking Act, urging parliament to adopt every proposed measure in full. The Federal Council's dispatch, published on 22 April 2026, targets the capital framework for systemically important banks and hands FINMA a set of preventive supervisory tools it has been requesting publicly for three years. For accounting firms, auditors, and CFOs serving Swiss-licensed entities, the reforms redefine the compliance and governance baseline they should be advising against.
What the Federal Council's Dispatch Actually Proposes
Ending Double Leverage at Systemically Important Banks
The dispatch addresses a structural weakness that regulators internationally have flagged for over two decades: foreign subsidiaries of systemically important banks (SIBs) are not fully backed by capital at the parent level, a gap commonly called double leverage. Switzerland last recommended abolishing this practice in 2012. The Federal Council's bill revives that recommendation, and FINMA explicitly endorses it. The regulator frames the decision as a political balancing act between the interests of bank shareholders and the potential cost to Swiss taxpayers if a large institution fails.
The Broader Too-Big-to-Fail Framework
Capital requirements are only one piece of the picture. FINMA is clear that the bill on its own is insufficient. The regulator describes the full too-big-to-fail (TBTF) package as essential to Switzerland's long-term viability as a financial centre, and frames each individual measure as interdependent. Removing any element risks undermining the whole architecture.
FINMA's Three Priority Supervisory Powers
Beyond capital, FINMA's statement is notable for the specificity of the additional powers it is seeking. Three instruments stand out.
An Accountability Regime
FINMA wants a statutory framework that can attribute responsibility to named senior individuals at supervised institutions, not just the institution itself. This mirrors approaches taken by regulators in the United Kingdom and Hong Kong and would represent a meaningful shift in how Swiss enforcement works in practice.
Authority to Impose Fines
Currently, FINMA cannot levy monetary penalties directly. The dispatch would change that. The ability to fine creates a genuine deterrent at the individual and institutional level, closing a gap that the Parliamentary Investigation Committee (PInC) report into Credit Suisse identified as a material weakness in Switzerland's supervisory toolkit.
Enhanced Public Communication Powers
FINMA is also seeking the statutory right to communicate more actively about concluded enforcement proceedings. At present, the regulator operates under significant confidentiality constraints that limit what it can say publicly, even after a case is closed. Broader disclosure authority would increase market discipline and allow counterparties, auditors, and investors to make better-informed decisions.
The Credit Suisse Lesson and What It Means for Governance Standards
FINMA's statement is direct: the lessons from the Credit Suisse crisis will only be considered learnt once these measures are in law. That framing matters for compliance professionals. The regulator is signalling that governance expectations at supervised institutions are not static. Firms that treat the Credit Suisse episode as a closed chapter may find themselves poorly positioned as the revised Banking Act moves through parliament.
The PInC report, which FINMA references alongside the Federal Council's TBTF report, concluded that the existing supervisory framework lacked early intervention mechanisms. The proposed reforms address that directly by giving FINMA the ability to act before a crisis becomes acute, rather than after the fact.
For firms operating in Switzerland or advising Swiss-licensed entities, this signals a shift toward a regime where governance failures carry individual as well as institutional consequences. Risk culture, internal controls, and capital adequacy documentation will all face greater scrutiny. Firms that already track FINMA's sanctions obligations posture, as covered in FINMA's recent sanctions obligations update for Swiss financial intermediaries, will recognise that the regulator's appetite for proactive enforcement is growing across multiple areas simultaneously.
Practical Implications for Accounting Firms and CFOs
Audit and Assurance Considerations
If the accountability regime becomes law, auditors working with Swiss SIBs will need to think carefully about how their findings are documented and to whom they are directed. Named senior managers bearing statutory accountability will have stronger incentives to act on audit findings quickly, but they will also want written records that demonstrate they did so. Engagement letters, management letters, and findings reports may need to be structured with that in mind.
Capital and Liquidity Reporting
The abolition of double leverage will affect how consolidated capital positions are calculated and reported for Swiss SIBs with foreign subsidiaries. Finance teams and their advisers should begin mapping which entities are affected and what the reclassification of intercompany capital flows would look like under the proposed rules. While the bill is still in the parliamentary process, early modelling prevents last-minute scrambles.
Digital Asset Entities Within Swiss-Licensed Groups
Switzerland has a significant cluster of digital asset firms operating under FINMA oversight, including banks holding crypto assets on behalf of clients. For these entities, the TBTF reforms are a reminder that the supervisory environment is tightening broadly. Firms relying on robust crypto bookkeeping software to maintain auditable records of digital asset positions will find those records increasingly important as FINMA's early intervention powers expand. The regulator's ability to act preventively means that gaps in record-keeping are more likely to surface before they become existential problems, not after. Similarly, teams evaluating digital asset accounting software should factor in audit-trail completeness and regulatory reporting compatibility as non-negotiable criteria under the revised framework.
The due diligence lens applies here too. Understanding how blockchain analytics data quality affects compliance decisions is directly relevant for Swiss digital asset entities trying to demonstrate robust governance to an increasingly assertive FINMA.
What Happens Next
The Federal Council's dispatch goes to parliament. FINMA's position is unambiguous: it wants every element of the proposed package enacted, without carve-outs. The regulator has been making this case publicly for three years, and the Credit Suisse episode gave that argument considerably more political weight. Whether parliament adopts the measures in full, in part, or with modifications will determine how quickly the accountability and enforcement landscape changes for Swiss financial institutions.
Firms should monitor the parliamentary schedule and begin internal gap assessments now, particularly around governance documentation, capital reporting at subsidiary level, and individual accountability mapping. Waiting for the final text means compressed implementation timelines.
Source: FINMA
FAQ
Double leverage arises when a bank holding company raises debt at the parent level and injects the proceeds into subsidiaries as equity, creating the appearance of a stronger capital position at the subsidiary than actually exists on a consolidated basis. International regulators have flagged this as a risk for more than two decades because it can obscure the true loss-absorbing capacity of a group. FINMA supports the Federal Council's proposal to abolish it for Swiss systemically important banks.
Any entity holding a Swiss banking licence, including those whose business involves digital assets, falls within FINMA's supervisory perimeter. The capital and governance standards proposed in the revised Banking Act would therefore apply to licensed digital asset banks just as they apply to traditional institutions. The specific capital treatment of crypto assets on the balance sheet remains subject to additional guidance, but the governance and accountability measures would apply across the board.
The Federal Council adopted the dispatch on 22 April 2026, sending it to parliament for debate. No implementation date has been set. The timeline depends on how quickly parliament moves and whether the bill undergoes significant amendment. Firms should track the parliamentary schedule and plan for a multi-year transition rather than assume immediate effect.
If enacted, the accountability regime would create a statutory basis for attributing supervisory responsibility to named individuals rather than relying solely on institutional-level enforcement. Senior managers could face consequences directly if governance failings occur on their watch. This is a significant shift from the current Swiss model and mirrors individual accountability frameworks in other major financial centres.
FINMA currently operates under confidentiality constraints that restrict what it can disclose even after an enforcement case is closed. Broader communication powers would allow the market, counterparties, and investors to factor supervisory findings into their own risk assessments, increasing market discipline. FINMA argues this is a preventive tool that complements its proposed early intervention authority.