«The war in Ukraine is not a threat to Swiss banks»

The war in Ukraine does not present a general risk for the Swiss banking system: this was stated by Finma, the Financial Market Supervisory Authority.

«Some institutions are punctually more exposed as a result of the conflict, but from our point of view there is no current systemic danger» Urban Angehrn, director of FINMA, said at the annual press conference, in accordance with the written text of his speech. The aim of the regulator was to identify widespread risks and potential effects of contagion within the banking system.

Within this framework, Finma is especially interested in compliance with capital and liquidity rules, as well as the enforcement of sanctions and the management of operational risks. Activities that pose risks for Swiss institutions include loans to Russian borrowers, direct investments in Russian securities, Lombard loans and derivatives activities. Trade finance with Vladimir Putin's country could also suffer losses due to sanctions.

«The industry has to conduct its business in an impeccable manner and therefore also abide by the sanctions,» Angehrn insisted. Nevertheless, Finma has not found any deficiencies in this regard. «On the contrary: the banks are taking the matter very seriously.»

Operational risks should also not be underestimated, including the threat of cyber attacks, which have grown against Swiss companies in all sectors in the past few months. But overall, Swiss banks' activity vis-à-vis Russia «is quite small compared to that of other markets,» pointed out the senior official who holds a doctorate in mathematics from Harvard and a master's degree in theoretical physics from ETH Zurich.

More broadly, according to Finma Board Chair Marlene Amstad, «events such as the war in Ukraine and the pandemic, but also instances such as Greensill and Archegos highlight the importance of solid capitalization and sufficient liquidity reserves for banks. . The stability of Swiss financial institutions is good »and the Swiss financial center« rests on solid and stable foundations,» the 54-year-old stressed.

Meanwhile, the real estate and mortgage sector continues to grow, ignoring the crises. «There are definite signs of surging,» Angehrn said in this regard. «Over the past 20 years, real estate prices have grown more rapidly than consumer prices, salaries and GDP,» observed the 57-year-old. «This trend has intensified since the onset of the coronavirus pandemic.»

Confronted with a 1.1 trillion-franc mortgage market, meaning more than the balance sheet of a systemically important bank such as UBS, Credit Suisse or Raiffeisen, Finma objects to a relaxation of the criteria for granting real estate loans. Relaxed regulation would lead to an even greater acceleration in demand, warns Angehrn. «This would further increase already high prices, while supply grows only slowly.»

The annual media briefing was also an opportunity to report on ongoing activity. In 2021, Finma carried out 650 inquiries, initiating 20 concrete proceedings, which the authority - by using an English term - called « enforcement »; in the previous year, the numbers were 628 and 33 respectively. Operating expenses have remained constant at 126 million francs. Staffing levels increased from 501 to 519 permanent positions.