Swiss Post’s position on the revision of banking legislation and “too big to fail” measures
Background
After the crisis at Credit Suisse in 2023, the Federal Council and policymakers introduced various measures to strengthen a secure and robust financial sector. In April 2024, the Federal Council published a report on banking stability (the so-called too big to fail or TBTF report), followed by the report of the Parliamentary Investigation Committee (PInC) at the end of the same year.
In June 2025, the Federal Council presented key points for corresponding legislative amendments and launched an initial consultation on amendments at ordinance level (Capital Adequacy Ordinance – CAO). On 26 and 29 September respectively, the Swiss Bankers Association (SBA) and PostFinance submitted their comments on the amendment to the Capital Adequacy Ordinance, clarifying their positions on the key points of the Federal Council.
Preliminary remarks
Relevance of PostFinance
With 2.4 million private and business customers and around 1.4 billion transactions per year, PostFinance is one of Switzerland’s leading financial institutions and is the number one for payment transactions. PostFinance and Swiss Post want to maintain this social relevance. To this end, it is important that the regulatory framework is designed in such a way that the business activities required to finance the universal service obligation in payment transactions are not restricted or impeded in any way.
Proportionality
Swiss Post welcomes the Federal Council’s intention to strengthen the stability, competitiveness and reputation of the Swiss financial center. However, it points out that the specific characteristics of individual banks must be taken into account when doing this. In particular, the principle of proportionality must play a central role in weighing up individual measures so that institutions with different characteristics are treated in an appropriately differentiated manner. Differentiation must take into account various criteria, namely the size, complexity, risk profile and ownership structure of the institutions.
Coherence of standards
PostFinance is a wholly-owned subsidiary of Swiss Post, which is itself wholly owned by the Confederation. PostFinance assumes universal service responsibility for payment transactions and performs functions that are both economically and socially relevant. When implementing bank stability measures, care must be taken to ensure that new regulations are compatible with existing legal provisions and mandates and that no new areas of conflict arise.
1. Corporate governance requirements and early intervention measures
The Federal Council is in favour of making the requirements for corporate governance more legally binding for systemically important banks and, where appropriate, for other banks. In particular, it proposes the introduction of a responsibility regime that clearly assigns responsibilities. In the event of deviating behaviour, this regime is to be combined with sanctions to address rule violations. The measure must be implemented in accordance with the principle of proportionality and should be structured differently depending on the size, complexity, risk profile and ownership structure of the banking institution.
In addition, the Federal Council is proposing to expand the possibilities for early intervention by supervisory authorities. The planned measures would enable FINMA to intervene in the day-to-day business of institutions at an early stage. For example, FINMA could independently introduce measures from the stabilization plan.
Swiss Post’s position
The strengthening of corporate governance by increasing the relevant provisions at the legislative and regulatory level is to be welcomed with a view to enhancing legal certainty.
Nevertheless, the current supervisory provisions are already in conflict with the existing postal legislation. New rules to promote the independence of members of governing and executive bodies could exacerbate this tension. Depending on the final structure, there is a risk for Swiss Post that the measures proposed by the Federal Council deviate from the directives on the uniform management of Swiss Post and its subsidiaries (Art. 4 OPSOA) and from the provisions on Swiss Post’s majority shareholding in PostFinance in terms of capital and votes (Art. 2 OPSOA and Art. 14 para. 2 PSOA). These regulations ultimately ensure the fulfilment of universal service obligations. According to Art. 4 OPSOA, the Swiss Post Board of Directors is responsible for the uniform management of Swiss Post and its subsidiaries, which has an impact on PostFinance’s focus. Swiss Post aligns its business activities with the strategic goals set by the Federal Council.
Swiss Post believes that the different legal forms of the institutions must be taken into account when implementing corporate governance measures. The proportionality of the measures depends not only on the supervisory category of a bank, but also on other criteria such as its size, the complexity of its business model, its risk profile and special ownership or universal service obligations.
The planned additional options for intervention have the potential to restrict PostFinance’s freedom of action. When designing the various measures in the area of early intervention, it is therefore crucial that FINMA’s scope of action is defined as clearly as possible by the legislator.
No new areas of conflict in legislation
The inclusion of new requirements for corporate governance in the Banking Act may not lead to any contradictions with the existing postal legislation. Tensions between different legal bases should therefore be avoided as far as possible.
In the undesirable case of undifferentiated regulation, at the very least a special regulation must be introduced in the banking legislation for PostFinance BoD members. These special provisions must continue to ensure uniform management in accordance with Art. 4 OPSOA and supervision of the subsidiaries by the Swiss Post Board of Directors.
2. Expansion of settlement options
The Federal Council intends to extend the options for winding up a bank and to regulate orderly winding-up by law. The aim is to increase the scope of action in various potential crisis situations through different winding-up models. A clear demarcation from the concept of “restructuring” is to ensure that winding-up can be adequately addressed in the relevant scenarios.
Swiss Post’s position
Swiss Post is generally positive about the measure. This is reflected in the fact that the alternative strategy in PostFinance’s TBTF contingency plan already provides for an orderly winding-up.
Even under the current legal framework, PostFinance, as a bank with a universal service obligation, is faced with various conflicting priorities. Specifically, Article 3 para. 1 b of the Postal Services Organization Act (PSOA) stipulates that it has the mandate to safeguard payment transactions and account management. This continues to be a key contribution by Swiss Post to the public service for the Swiss population. At the same time, the Banking Act offers clear options for the winding-up of banks, which have been expanded by the revision. If PostFinance were to be wound up, Swiss Post would no longer be in a position to fulfil its universal service obligation in payment transactions. Under the existing legal framework, it is not clear whether the universal service obligation would take precedence in the event of a crisis and a special case would therefore have to be created in the Banking Act for PostFinance as a bank with a universal service mandate, or whether the winding-up should take precedence. In the second scenario, it is necessary to clarify in advance how the fulfilment of the universal service obligation in payment transactions can be safeguarded without PostFinance. The ongoing amendments to the law are to be used to clarify the existing differences in standards. The legal contradiction arising from the application of the different laws must be resolved.
Swiss Post believes that an orderly winding-up of PostFinance must be guaranteed in the event of a crisis. A clarification of the legal framework is essential for this. In specific terms, this means that a solution for the universal service obligation of Swiss Post in payment transactions in the event of the winding-up of PostFinance must be found.
Ensure clarity concerning the universal service obligation for payment transactions
An orderly winding-up of banks with a universal service obligation is to be made possible from a regulatory perspective. In order for PostFinance to be wound up, it is essential to clarify how Swiss Post’s universal service obligation for payment transactions will be regulated in future – particularly with regard to its scope and financing.
3. Debt-to-equity conversion during restructuring (bail-in bonds)
In the case of bail-in bonds under Art. 30b of the Banking Act, debt capital is converted into equity as part of a restructuring process. Specifically, this means that creditors lose their repayment claims. For the bank itself, this has the advantage of relieving it of repayment obligations and strengthening its equity base. The main aim of a bail-in bond is to increase the bank’s equity to such an extent that it once again meets the legal requirements.
The Federal Council wishes to strengthen the legal security of a bail-in with the aim of improving the credibility of the feasibility of a restructuring. The findings from the preparation of the restructuring option for Credit Suisse are being used for this purpose. Work must also be driven forward at the international level.
Swiss Post’s position
Swiss Post welcomes the efforts of the Confederation to create increased legal certainty in the event of a bail-in.
According to prevailing law, PostFinance’s ownership structure, which is set out in Art. 14 para. 2 PSOA and Art. 2 para. 1 OPSOA, constitutes a hurdle for the issue of bail-in bonds. Without a corresponding amendment to the law, PostFinance will not be able to use this key instrument to meet the gone concern requirements that it is required to meet as a systemically important institution. Compared to other systemically important institutions, this results in an unfavourable regulatory framework for PostFinance. With the exception of possible government guarantees, bail-in bonds represent the most cost-effective
option for meeting gone concern requirements as provided for in the Capital Adequacy Ordinance (CAO). If PostFinance were to continue to be refused the issue of bail-in bonds, the institution would face higher refinancing costs than other systemically important banks. This results in a structural competitive disadvantage compared to other systemically important banks. To avoid such a development, PostFinance must be given access to all available capital variants, including bail-in bonds.
The example of Zürcher Kantonalbank (ZKB) clearly shows that the requisite basis for issuing bail-in bonds was laid down for the specific ownership structure of ZKB as part of the latest Banking Act (Art. 28a and Art. 30b para. 6 Banking Act) and the revision of the Capital Adequacy Ordinance (Art. 40a CAO). Such an adjustment allows the bank to press ahead with the development of gone concern capital and thus relieve the public sector of a possible risk of insolvency of the bank. A similar solution must also be made possible for PostFinance.
Currently, the majority of Swiss Post’s capital is used to meet PostFinance’s equity requirements. By using bail-in bonds, Swiss Post could cover part of these requirements with cheaper debt capital without changing the ownership structure (in a similar way to ZKB). The capital freed up in this way would provide Swiss Post with the entrepreneurial freedom it needs to pursue the Swiss Post of tomorrow strategy.
Amendments to the law as per the ZKB article
The possibility of bail-in bonds for PostFinance is guaranteed under the condition that the ownership structure of PostFinance is not adjusted. Swiss Post therefore proposes that either an article be introduced in the banking legislation that grants PostFinance exemptions analogous to those provided for ZKB, or that the existing articles 28a and 30b para. 6 BankA and article 40a CAO also apply to (indirectly) federal-owned banking institutions.
4. Forward-looking elements in institution-specific Pillar 2 capital surcharges
As a further possible measure to increase banking stability, the Federal Council has indicated that future-orientated elements should be taken into account in institution-specific Pillar 2 capital surcharges. These are additional capital requirements for banks that go beyond the general minimum requirements and are determined individually. A legal basis for this needs to be created for FINMA for the systematic determination of institution-specific Pillar 2 capital surcharges. The Federal Council considers that such capital surcharges are “bank-specific, risk-orientated and proportionately implementable” and
“should be embedded in the international regulatory and supervisory framework”.
Swiss Post’s position
The specific implementing provisions and the impact on the individual banks have not been sufficiently explained in the Federal Council’s previous reports. For Swiss Post, it is essential that this legal basis be drafted in as concrete, transparent and thus binding a manner as possible for FINMA in order to guarantee efficient supervision and legal certainty for the institutions concerned.
In addition to the points mentioned in the SBA’s statement, which Swiss Post supports, we would like to emphasize that the instrument of Pillar 2 capital surcharges must be applied by the supervisory authority with great care and discretion. In particular, the institution-specific nature of such additional capital requirements needs to be ensured in order to avoid generally exacerbating the situation.
Clear, mandatory and proportionate implementation of new rules on Pillar 2 equity capital
When introducing new Pillar 2 capital surcharges, it is necessary to ensure that a clear regulatory framework is defined and any additional capital requirements are effectively adapted to the specific institution. Only in this way can both the efficiency of the supervisory system and the legal certainty for institutions be ensured.