Switzerland has unveiled a new set of banking regulations designed to complete the package of reforms aimed at preventing a repeat of the Credit Suisse collapse.

The Swiss Federal Council launched a consultation Wednesday on a broad set of measures that it said are intended to close the gaps in the country’s existing too-big-to-fail regulations.

The new regulation takes aim at corporate governance at banks, supervision, and crisis preparations including liquidity provision. It will be mainly targeted at systemically important banks in the country, though some will apply to the sector as a whole in cases where their restriction would be “inappropriate and hard to justify in terms of legal equality”, the collective head of state said.

The consultation runs until 19 November, and any changes will not be implemented until 2029 at the earliest, the government said.

A new senior managers regime will be introduced for banks with over 250 employees, requiring them to define in a document who is responsible for what decisions. In the result of a breach, either banks themselves or the country’s banking regulator, the Swiss Financial Market Supervisory Authority (Finma) will be able to take “targeted action”.

The Federal Council said that this will create a “clear division of duties” at a senior management level.

New principles for all banks on risk mitigation and moral hazard with regards to remuneration are also set to be implemented. The rules will introduce retention periods for components of variable remuneration, as well as the potential for additional clawbacks should these rules be breached.

The country’s existing too-big-to-fail regulations were drawn up after the 2023 collapse of Credit Suisse, a 167-year-old institution sitting at the heart of one of the country’s most important sectors.

Switzerland’s other largest bank, UBS, was allowed to acquire Credit Suisse in a multibillion-dollar rescue deal, but the experience prompted the country to reexamine its opaque banking practices.

According to the Swiss government, banking and insurance makes up around nine per cent of the country’s GDP and employs over 200,000 of the country’s nine million people.

Switzerland is also intending to strengthen the powers of Finma, granting it the ability to impose measures earlier and more effectively “where risks are apparent” to prevent issues from worsening.

The regulator would additionally be able to impose fines on non-compliant institutions, issue penalties for late implementation of ordered measures, and be required to inform the public about completed proceedings as a matter of course.

The regulator can currently take a variety of measures, including the withdrawal of licences, confiscation of illegally obtained profits and imposing industry bans, but is not able to levy general fines. The proposed changes would allow it to impose fines of up to 10 per cent of a bank’s annual operating income.

Finally, the government intends to expand access to central bank liquidity for banks.

The latest package follows news that the proposed credit reforms targeting UBS are likely to be watered down to ensure it remains competitive, though they will still require the bank to hold significantly more capital than is currently mandated.

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