Switzerland: Financial Sector Stability Assessment; imf country Report 14/143; April 16, 2014

15. The authorities should continue to work actively with the banks and the key host 
authorities to finalize viable resolution strategies. Pursuing both TD and “bottom up” (BU) 
strategies in tandem might have benefits, but could be costly. It has been recommended that the 
authorities quantify the potential costs and carefully sequence necessary reforms to ensure that 
they are robustly implemented and that cooperation agreements can soon be signed with the key 
host authorities.
16. High capital buffers are crucial to support the Swiss brand in wealth management 
and also provide protection for TBTF resolution and limit leverage. CoCos provide a critical 
add-on to common equity (Figure 3) although more transparency on risk-weighted asset 
calculations should also be provided to the public to restore confidence in banks’ internal models.
2
http://www.finma.ch/e/aktuell/pages/mm-pos-sanierung-abwicklung-20130807.aspx
3
These issues are not unique to Swiss banks applying a TD strategy.

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SWITZERLAND
14 
INTERNATIONAL MONETARY FUND
Figure 3. Switzerland: The Swiss TBTF Capital Regime 
(Phased-in until January 1, 2019) 
Source: IMF staff calculations.
17. The leverage ratio needs to be strengthened above Basel minima (Figure 4). While 
Switzerland was one of the first countries to impose a leverage ratio, and has a timetable for 
implementation more ambitious than anticipated under Basel III, its method of calculating the ratio 
does not guarantee an outcome that is comparable with Basel, given the inclusion of assets that
would be classified as Tier 2 under Basel III. In any case, Switzerland’s position as home of two G-
SIFIs indicates that, as with regards to capital requirements, there should be additional buffers on 
leverage.
4