Basel Committee concludes assessment of Basel III capital regulations in Switzerland

by Sabrina I. Pacifici on June 25, 2013

“The Basel Committee on Banking Supervision has today published a report assessing the regulations that implement the Basel capital framework in Switzerland. The assessment team evaluated compliance of Switzerland’s domestic capital rules vis-à-vis international Basel capital standards through its Regulatory Consistency Assessment Programme (RCAP). The team held technical discussions with senior officials and staff of the Swiss Financial Market Supervisory Authority (FINMA), and met with senior representatives from banks and regulatory audit firms based in Switzerland. Switzerland has implemented its Basel capital framework with an intention that it conforms closely to the Basel standard. The assessment found the implementation of the International Approach closely aligned with Basel III standards and therefore assessed it as “compliant”. 11 out of 14 assessed components were found to be “compliant”, while three of the components were graded “largely compliant” (definition of capital, credit risk-IRB, and Pillar 3). Although some differences with the Basel framework were found in these three areas, none of the findings were evaluated to be material at this point.  An alternative capital adequacy regime in Switzerland, the “Swiss Standardised Approach”, which has its origins prior to Basel I, is used primarily by smaller Swiss banks and is being phased out by end-2018. This approach was not assessed as compliant, but given it is not the approach used by most internationally active banks and is being discontinued, the assessment team judged that it should not impact on the overall rating for Switzerland.”

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