SWITZERLAND Law and Practice Contributed by: Judith Raijmakers and Florian Thomas Willi, Loyens & Loeff
6. Depositor Protection 6.1 Deposit Guarantee Scheme (DGS) The Swiss depositor protection scheme is based on a three-tier system and applies to Swiss-reg - ulated banks, foreign banks operating branches in Switzerland (provided the deposits are booked with the branch) and securities dealers. • Tier 1: Under the privileged deposit system, deposits up to a maximum of CHF100,000 per depositor and institution are privileged deposits. These privileged deposits are first paid out from the available liquid assets of the failed bank (outside of the schedule of claims under bankruptcy law). Such deposits are (i) paid out immediately if they are booked in Switzerland, and (ii) paid out as soon as the bank can pay out such deposits legally and operationally if they are booked outside of Switzerland. For that purpose, all banks must hold collateral consisting of assets in Switzer - land equivalent to 125% of the protected and preferential client deposits. • Tier 2: As a second-tier measure, the deposit protection scheme applies. Esisuisse is tasked with maintaining such system. All banks in Switzerland that accept client deposits are obliged to participate in the depositor protection scheme. If the bank has insufficient liquidity available to cover the protected deposits (see tier 1), esisuisse funds the disbursement of protected deposits up to a maximum of CHF100,000 per deposi - tor. The amount that all banks contribute to esisuisse is based on 1.6% of the total of all deposits secured at banks in Switzerland (currently CHF7.9 billion), but may not be less than CHF6 billion. The Federal Coun - cil is authorised to increase this amount if necessary. Up to such cap, the guaranteed
amounts must be paid out within a period of seven days to the liquidator by esisuisse. • Tier 3: If the deposits have not been paid out under tier 1 or tier 2, they are treated prefer - entially and placed among the second class of bankruptcy claims (up to a maximum of CHF100,000). In such a case, they may be paid out only partially, and at the same time as other second-class claims (after first-class claims, such as employee salary and pension fund claims, have been paid out). The deposit protection scheme also applies to cantonal banks; however, some cantonal banks additionally benefit from a state guarantee. Can - tonal banks are banks controlled by a Swiss can - ton (at least one-third of the capital and voting rights must be held by a Swiss canton for a bank to be characterised as cantonal). The applicable cantonal legislation provides to what extent the liabilities incurred by a cantonal bank are insured by the concerned canton. Assets held at providers that use the “sandbox” exception or use the fintech licence are not pro - tected under the depositor protection scheme. 7. Prudential Regime 7.1 Capital, Liquidity and Related Risk Control Requirements Statutory Capital Requirements To obtain a banking licence, banks need to have a fully paid-in minimum capital of at least CHF10 million. FINMA can demand higher statu - tory capital, depending on the bank’s intended activities. Overview: Regulatory Capital and Liquidity In general, the Basel III standards have been gradually incorporated into Swiss financial
580 CHAMBERS.COM
Powered by FlippingBook