Wednesday, 19 August 2026
More than three years after the collapse of Credit Suisse forced an emergency takeover by UBS, Switzerland is moving towards a substantially tougher system for supervising its banks. The reforms could change executive accountability, crisis management and the financial safeguards required around the country’s largest institutions.
The Federal Council launched the latest stage of its banking reforms on 12 August 2026, opening consultation on amendments to the Banking Act and Liquidity Ordinance until 19 November. The measures are intended to address weaknesses exposed by the Credit Suisse crisis and reduce the possibility that taxpayers and the wider economy would again have to absorb the consequences of a major bank failure.
Although presented within Switzerland’s “too big to fail” framework, the proposals reach further than UBS and the country’s other systemically important institutions. They would give the Swiss Financial Market Supervisory Authority, FINMA, greater scope to intervene before financial problems become critical and introduce clearer personal responsibility for senior executives at larger and more complex banks.
The changes form part of a broader regulatory overhaul rather than a standalone response. In April, the Federal Council advanced another major component of the programme requiring systemically important banks to fully cover investments in foreign subsidiaries with Common Equity Tier 1 capital. The government argues that the Credit Suisse collapse demonstrated that risks associated with overseas subsidiaries were inadequately reflected in the previous system.
That part of the reform is particularly significant for UBS, which became Switzerland’s only remaining globally significant banking group after absorbing Credit Suisse in 2023. Current estimates suggest the measures could require UBS to carry around USD 20 billion of additional capital, although the eventual regulatory outcome remains subject to the political process.
The August proposals tackle a different problem highlighted by the Credit Suisse experience: whether regulators had sufficient authority to intervene before deterioration became irreversible. Under the proposed framework, FINMA would receive stronger preventative powers rather than having to wait until a bank was approaching insolvency or had already breached regulatory requirements. It could require corrective measures when weaknesses in governance, capital, liquidity or organisation indicated growing financial risk.
This represents an important change in Swiss supervision. Instead of regulation concentrating primarily on whether an institution satisfies prescribed ratios and requirements at a particular point in time, supervisors would have greater ability to intervene when they believe emerging problems could threaten the bank’s financial position or its customers.
Executive responsibility would also become more explicit. Switzerland plans to introduce a senior managers regime for more complex banks, broadly following principles already established in the United Kingdom. Responsibilities would have to be allocated more clearly among senior executives, making it easier to identify who is accountable for particular areas of a bank’s operations.
The proposal would extend beyond systemically important banks. Institutions with at least 250 full-time-equivalent employees could come within the framework where their organisational complexity warrants it, while FINMA could potentially impose similar requirements on smaller institutions where serious governance deficiencies are identified.
Remuneration is another target. Switzerland does not propose a simple ceiling on bankers’ pay. Instead, the intention is to create a stronger connection between compensation, long-term performance and responsibility for risk. For systemically important institutions, parts of variable remuneration for relevant senior employees could be deferred and potentially reduced or recovered when subsequent losses, misconduct or management failures demonstrate that earlier rewards were unjustified.
The government is also addressing one of the central lessons of the Credit Suisse rescue: a bank can satisfy regulatory capital requirements and still encounter an acute liquidity crisis if customers and counterparties lose confidence rapidly.
The Swiss National Bank has consequently placed greater emphasis on ensuring banks have assets prepared in advance that can be pledged to central banks for emergency funding. The objective is to prevent valuable collateral becoming practically unusable during a crisis because the necessary legal, operational or technical preparations were never completed.
This distinction between capital and liquidity became especially important during the Credit Suisse crisis. A bank can possess assets whose value exceeds its liabilities while simultaneously struggling to obtain enough immediately available cash to meet withdrawals. Preparing collateral before a crisis gives the central bank greater capacity to provide liquidity when markets are under stress.
Switzerland’s four systemically important banking groups, UBS, Zürcher Kantonalbank, Raiffeisen and PostFinance, already operate under additional capital, liquidity and recovery requirements because their failure could disrupt functions considered essential to the Swiss economy, including deposits, domestic lending and payment services.
The new framework would strengthen crisis preparation further. Systemically important institutions would face more detailed recovery and resolution requirements designed to demonstrate not simply that a theoretical restructuring could take place, but that the measures could realistically be implemented during a rapidly developing crisis.
The economic debate surrounding the reforms is nevertheless becoming increasingly important. Stronger capital and liquidity requirements make banks more resilient because shareholders and bank resources provide a larger buffer before public intervention becomes necessary. However, additional capital also has an economic cost. If substantially greater amounts of equity have to support banking activities, institutions may respond by accepting lower returns, reducing particular activities or attempting to increase margins.
UBS has argued that excessive requirements could weaken its ability to compete internationally. The Swiss Bankers Association has also questioned the breadth of parts of the government’s proposals and the extent of the additional authority being considered for FINMA.
The government and Swiss National Bank take a different position. The SNB supports the central capital proposal and considers UBS capable of meeting the requirements, pointing to the bank’s existing capital position and earnings capacity.
For Switzerland’s property market, however, it is important to distinguish the political argument over UBS from the likely impact on domestic lending. The Federal Council argues that the additional capital requirement for foreign subsidiaries should not increase the cost of Swiss mortgages or domestic corporate lending because it applies to risks generated by overseas operations rather than the Swiss loan book. Under this reasoning, those additional financing costs should remain attached to the activities creating them rather than being transferred to domestic borrowers.
There is therefore no clear basis at present for concluding that the reform will directly increase Swiss mortgage or commercial real estate lending costs. The indirect consequences of the broader regulatory overhaul are more difficult to determine.
Banks facing tighter governance, liquidity and risk-management requirements could become more selective about complex or highly leveraged transactions. Commercial property development, large acquisition financing and other capital-intensive activities may therefore receive greater scrutiny even if the reforms do not mechanically increase the regulatory cost of every domestic property loan.
Much will depend on how banks adjust their balance sheets once the final rules are known. For institutional real estate investors, the reforms could consequently produce a mixed outcome. A more resilient banking system reduces systemic financial risk and can strengthen confidence in Switzerland as an investment market. At the same time, tighter risk discipline could reinforce the differentiation between conservatively financed assets and transactions requiring greater leverage.
The Credit Suisse experience illustrates why Switzerland considers that trade-off necessary. Before its collapse, Credit Suisse was formally subject to extensive international and Swiss regulation. Yet confidence deteriorated sufficiently rapidly that authorities concluded an emergency takeover by UBS was necessary in March 2023. The subsequent government review identified shortcomings in the existing too-big-to-fail regime that required further reform.
The resulting regulatory project is therefore attempting to address several weaknesses simultaneously: insufficient capital protection around foreign subsidiaries, weaknesses in management accountability, limitations on early supervisory intervention and difficulties mobilising liquidity quickly during a crisis.
Implementation will take years rather than months. The consultation on the latest Banking Act and Liquidity Ordinance changes remains open until 19 November 2026, after which the Federal Council intends to prepare legislation for Parliament. The legislative changes are not expected to enter into force before 2029 at the earliest, while parts of the new liquidity framework could involve considerably longer transition periods.
The eventual consequences will therefore depend heavily on what survives consultation and parliamentary debate. For Switzerland, the central issue is larger than the regulation of UBS. The country is attempting to preserve the advantages of hosting internationally significant financial institutions while reducing the possibility that the failure of one of them could again require extraordinary government intervention.
For property investors and businesses dependent on bank financing, the immediate implications are less dramatic. There is currently little evidence that the proposals will automatically translate into more expensive Swiss real estate lending. The more important longer-term effect could instead be a banking system placing greater emphasis on liquidity, leverage, governance and the ability of borrowers and assets to withstand periods of financial stress.
In that sense, the legacy of Credit Suisse may ultimately extend well beyond banking regulation. Switzerland is moving towards a financial system in which access to capital is accompanied by closer examination of the risks behind it, a development that could gradually influence how banks evaluate companies, developments and investment assets across the wider economy.
Source: CMS and CIJ.World Research & Analysis Team
