Annual reports

Annual report 2021

Chairman's report


Another Covid-affected year

The Covid crisis continued to dominate society in 2021. However, the substantial growth in deposits with Swiss banks shows that bank clients have great confidence in their banks, thanks in part to esisuisse.

Strengthening deposit insurance in the Banking Act

In February 2015, the Federal Council launched a partial revision of the Banking Act (BankA) entitled «Further development of deposit insurance». The revised Banking Act is expected to enter into force on 1 January 2023. Parliament passed this partial revision on 17 December 2021. The revision significantly strengthens deposit insurance in three areas:

  • All banks in Switzerland are already legally obliged to hold liquidity in case they are required to pay into the deposit insurance scheme. They are now required to deposit 50% of this amount with a third-party custodian in advance in the form of securities or cash. The remaining 50% is still subject to the strict liquidity requirements applicable to banks.

  • The payment obligation for all banks – currently CHF 6 billion – is being increased. It is now based on 1.6% of all deposits protected under the scheme, but no less than CHF 6 billion. With all protected deposits currently totalling around CHF 489 billion (as at 31 December 2020; FINMA will disclose the data as at 31 December 2021 to esisuisse after the date of preparation of this report), this results in a payment obligation of CHF 7.8 billion. This amount will be dynamically adjusted to the current level of protected deposits.

  • One of the main purposes of deposit insurance is to quickly provide affected bank clients with enough money to meet their financial obligations (up to a maximum of CHF 100 000 per client and bank). The repayment period, which has so far not been legally regulated, is therefore being shortened.
Dissolution of the Board Case Committee (BCC)

The International Monetary Fund (IMF) criticised esisuisse’s governance in April 2014. The subsequent Brunetti report of December 2014 then made concrete recommendations for improving esisuisse’s governance and independence. In particular, it stated that the composition of the Board of Directors needed to be changed and that the association should be made independent by revising the Articles of Association.

esisuisse implemented this call for stronger governance in 2015, when it became organisationally and operationally separate from the Swiss Bankers Association. The Board of Directors was re-appointed, including at least three Board members who are independent of the banks. esisuisse’s Board of Directors currently has four independent members, including the Vice Chairman. esisuisse has also defined a structured recruitment process, including an assessment, for new Board members, thus ensuring that the independent members also meet the high professional and personal requirements for the mandate.

In 2019, the Board of Directors of esisuisse resolved to further strengthen governance in relation to deposit insurance calls. esisuisse’s Articles of Association in force until this point stipulated that information from FINMA about the impending closure of a bank must be kept confidential from all members of the Board of Directors, including the independent members. In June 2020, the General Meeting of Members approved an amendment to the Articles of Association providing for an exception to this confidentiality requirement for the independent members of the Board of Directors.
This allowed the Board Case Committee (BCC), which had been newly formed from the independent members of the Board of Directors, to also supervise the Office in the critical phase between receipt of advance information from FINMA and the public announcement of a bank’s closure.
FINMA supported and approved the improvement in governance initiated by esisuisse. In esisuisse’s opinion, in the implementation details, it was not feasible to put into practice the requirements for the members of the BCC regarding conflicts of interest. esisuisse’s Board of Directors therefore dissolved the BCC on 31 December 2021. With the dissolution of the BCC, the independent members of the Board of Directors will also cease to be informed in advance of a bank’s closure.
esisuisse continues to assume that FINMA will inform esisuisse’s management at an early stage in the event of an impending deposit insurance call (at least 14 working days in advance) so that esisuisse can properly carry out its duties.

Projects in 2021

  • As mentioned in the introduction, the most important project for esisuisse was providing advice and support on the revision of the Banking Act as an expert organisation. esisuisse has significantly contributed to the revision on various levels and worked intensively with the banks, the Swiss Bankers Association (SBA) and the authorities. esisuisse also had the opportunity to participate in a working group of the State Secretariat for International Finance (SIF) that is working on drafting the new Banking Ordinance (BankO), which needs to be amended due to the revision of the act.

  • The «Operational Readiness» project launched in 2018 aims to optimise procedures in the event of a deposit insurance call. These processes were further improved and documented on the reporting year. Findings from a bank closure simulation exercise conducted in the autumn also led to improvements in esisuisse’s case preparations.

  • esisuisse plays an active role in both the International Association of Deposit Insurers (IADI) and the European Forum of Deposit Insurers (EFDI). For example, esisuisse’s CEO, Gregor Frey, was confirmed as a member of IADI’s Executive Council in November 2021. The aim of this international engagement is to increase understanding of Swiss deposit insurance and create acceptance. These activities are of key importance for anticipating future regulatory trends and, where possible, playing a part in shaping them. Numerous expert committees and specialists involved in further international development in this area also contribute to evaluating implementation in the member states.

  • On 21 December 2009, bankruptcy proceedings were opened against ASTON BANK SA in liquidation. esisuisse consequently funded the payout of the protected deposits to the clients of the bankrupt institution. At the end of November 2021, the liquidator of ASTON BANK SA in liquidation entirely repaid these funds to esisuisse from the bankruptcy assets. The funds repaid by the liquidator, after deduction of the case costs, are being reimbursed to those members of esisuisse that contributed to the payout of the protected deposits at the time.