Document dated Mar. 5, 2025, received SWI FINMA on Mar. 19, summarized Mar. 22.
Circular Background
With this new circular, SWI FINMA is providing greater clarity regarding interpretative questions regarding the scope and content of the consolidated supervision of financial groups that are covered by the Banking Act, as well as the Financial Institutions Act.
It sets out requirements for including group companies in consolidated supervision and decisive factors like activities in financial sector and the existence of an economic unit.
Requirements listed in circular can be grouped according to quantitative and qualitative aspects, and the latter includes elements of the corporate governance at group level.
Publication of the Circular follows a consultation in 2024, which ended on Nov. 1, 2024.
The materials provided with the new Circular include the feedback statement from that previous consultation, confirming participants largely welcomed draft and if necessary, further details or clarifications were added to the Circular or to the explanatory notes.
Comments on the proposed Circular had been received from five bodies or institutions.
Circular Overview
Circular describes SWI FINMA’s practice regarding consolidated supervision according to Article 3b–3g of Banking Act (BA), and Articles 21–24a of Banking Ordinance (BO).
It provides specific information on consolidated supervision, with its scope and content.
Circular covers financial groups under Article 3c BA, and banks under Article 1a BA as part of financial group, financial groups dominated by securities firms under Article 49 of Financial Institutions Act (FinIA), and securities firms under Article 2 para. 1, FinIA.
Under Article 3d BA, SWI FINMA subjects financial groups pursuant to Article 3c para. 1 BA, and conglomerates with by banks or securities firms, to consolidated supervision.
Under Article 3c para. 2 BA, a financial conglomerate dominated by a bank or securities firm is a financial group that operates primarily in the banking or securities firm sector and that includes at least one insurance company of substantial economic importance.
For consolidated supervision to arise, there must be a group of at least two companies, at least one of which is institution, with substance over form, where there are queries.
Regulatory scope of consolidation is assessed and is applied on a case-by-case basis, taking into account facts and circumstances, and audit firm examines this assessment.
Definition of activity in the financial sector under Article 4 BO is not limited to activities subject to licensing or registration requirement in Swiss financial market legislation.
Financial groups can be categorized based on structure as Parent company structure, Holding structure, Atypical structure or based on Subgroup of a foreign financial group.
Also, Subordinated financial group part of financial group subject to FINMA supervision.
Effectiveness
The terms of the new Circular on consolidated supervision will apply from Jul. 1, 2025.
