Loss Absorption and Bail-in for Swiss Banks
In the event that a bank is failing or where its capitalization is no longer adequate, the Swiss Financial Market Supervisory Authority ("FINMA”) may take measures to improve such bank’s financial viability rather than liquidating it. “Loss absorption” and “bail-in” are important instruments to support any such measures. This is now possible as a result of a revision of the Banking Act of 8 November 1934 (the “Banking Act”) in 2011 and the taking effect of a revised Bank Insolvency Ordinance on 1 November 2012 (the “Bank Insolvency Ordinance”) and of a revised Capital Adequacy Ordinance on 1 January 2013 (the “Capital Adequacy Ordinance”).
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