Capital Adequacy Ordinance (CAO)
English is not an official language of the Swiss Confederation. This translation is provided for information purposes only and has no legal force.
Chapter 1 General Provisions
Art. 124 Principle
1 In addition to the requirements applicable to all banks concerning capital and risk diversification under Titles 2 to 4 of this Ordinance, the special requirements of this Title shall apply to systemically important banks. 2 The amount of the special requirements shall be defined at the highest level of the financial group. 3 The special requirements must be met by the entities listed below, at the level of the financial group, the level of each individual entity licensed under the BankA and the level of each securities firm licensed under the FinIA: a. entities performing systemically important functions; b. the highest entity in a financial group, where the consolidation scope includes an entity under letter a; c. entities at the head of significant subordinate financial groups, where the consolidation scope includes an entity under letter a; and d. entities which, owing to their core function or their relative size, are significant for the financial group. 4 In individual cases, F
Art. 124 — Amended by No I of the O of 21 Nov. 2018, in force since 1 Jan. 2019 (AS 2018 5241). Para. 3 — SR 952.0 Para. 3 let. d — Amended by No I of the O of 27 Nov. 2019, in force since 1 Jan. 2020 (AS 2019 4623). Para. 4 — Inserted by No I of the O of 27 Nov. 2019, in force since 1 Jan. 2020 (AS 2019 4623).
Art. 124a Internationally active and non-internationally active systemically important banks
1 Internationally active systemically important banks are those designated as global systemically important banks by the Financial Stability Board. 2 Where a systemically important bank no longer qualifies as internationally active under paragraph 1, FINMA may continue to designate it as such if this is necessary owing to the scale of its activities abroad. 3 Other systemically important banks shall not be deemed to be internationally active.
Art. 124a — Inserted by No I of the O of 11 May 2016, in force since 1 July 2016 (AS 2016 1725).
Art. 125
Repealed by No I of the O of 21 Nov. 2018, with effect from 1 Jan. 2019 (AS 2018 5241).
Art. 125a
Inserted by No I of the O of 11 May 2016 (AS 2016 1725). Repealed by No I of the O of 22 Nov. 2017, with effect from 1 Jan. 2018 (AS 2017 7625).
Chapter 2 Convertible Capital and Bail-In Bonds
Amended by No I of the O of 11 May 2016, in force since 1 July 2016 (AS 2016 1725).
Art. 126 Convertible capital
1 Convertible capital shall be deemed to be capital within the meaning of Article 11 paragraph 1 letter b in conjunction with Article 13 of the BankA and capital from write-down bonds under Article 11 paragraph 2 of the BankA that meets the criteria in this Chapter. 2 Convertible capital shall be issued to investors outside the financial group by: a. the group parent company; b. a group company specially established for this purpose by financial groups and bank-dominated financial conglomerates; or c. another group company licensed by FINMA.
Art. 126 — Amended by No I of the O of 11 May 2016, in force since 1 July 2016 (AS 2016 1725).
Art. 126a Bail-in bonds
1 Bail-in bonds may be recognised as additional loss-absorbing funds under Chapter 4 only if they: a. are fully paid up; b. are issued by a Swiss entity; c. are subject to Swiss law and jurisdiction; in justified cases, FINMA may grant exemptions if it can be demonstrated that a conversion or write-off ordered by FINMA is enforceable in the jurisdictions concerned; d. are issued by the group parent company or, with FINMA approval and in accordance with international standards, are issued by a group company exclusively established for this purpose, provided that it is ensured that the bonds can be used to absorb losses during restructuring; e. are legally or contractually subordinate to the issuer's other obligations, or structurally subordinate to the obligations of other group companies; f. do not contain an option for early termination by the creditors; g. cannot be offset or secured or guaranteed in a way that restricts their bail-in capacity; h. their terms and conditions contain a
Art. 126a — Inserted by No I of the O of 11 May 2016, in force since 1 July 2016 (AS 2016 1725). Para. 1 — Amended by No I of the O of 27 Nov. 2019, in force since 1 Jan. 2020 (AS 2019 4623). Para. 1 let. k — Amended by No I of the O of 27 Nov. 2019, in force since 1 Jan. 2020 (AS 2019 4623). Para. 3 — Amended by No I of the O of 21 Nov. 2018, in force since 1 Jan. 2019 (AS 2018 5241).
Art. 126b Intra-group bail-in bonds
1 Swiss entities of systemically important banks may recognise intra-group bail-in bonds as additional loss-absorbing funds under Chapter 4 at a level below group parent company if these funds: a. meet the criteria under Article 126a paragraph 1 letters a to c and f to i; b. are contractually subordinated to the issuer's other obligations; c. may be redeemed before maturity only with FINMA approval, in cases where such redemption would cause the level of additional loss-absorbing funds to fall below the quantitative requirements. 2 FINMA may deem loans that meet the criteria under paragraph 1 to be equivalent to bail-in bonds. 3 The debt instruments under paragraph 1 may be recognised in the amount of the receivable, provided that they have a residual maturity of at least one year.
Art. 126b — Inserted by No I of the O of 27 Nov. 2019, in force since 1 Jan. 2020 (AS 2019 4623).
Art. 127 Eligibility of convertible capital
1 Convertible capital may be recognised for certain capital components, according to the extent that it contributes to loss absorption when a trigger event occurs. The loss absorption must take the following forms: a. write-off as the result of a debt waiver; b. conversion into CET1 capital of the bank. 2 FINMA shall approve recognition under Article 11 paragraph 4 of the BankA only if the bank demonstrates that the effects under the BankA and its implementing ordinances will occur and that the requirements under corporate and capital market legislation are met. 3 ...
Art. 127 — Amended by No I of the O of 11 May 2016, in force since 1 July 2016 (AS 2016 1725). Para. 3 — Repealed by No I of the O of 29 Nov. 2023, with effect from 1 Jan. 2025 (AS 2024 13).
Art. 127a Eligibility of bail-in bonds
1 Bail-in bonds that meet the criteria under Article 126a may be recognised as additional loss-absorbing funds under Chapter 4 in the amount of the receivable, provided that they have a residual maturity of at least one year. 1bis Bail-in bonds issued by cantonal banks that meet the requirements under Article 40a may also be recognised under paragraph 1. 2 The maturities of the loss-absorbing funds shall be staggered so as to ensure that the requirements concerning the level of these funds can be met, even in the event of temporarily impaired borrowing conditions. A maximum of 25% of the requirements concerning additional loss-absorbing funds may be met with assets with a residual maturity between one and two years. 3 Where Tier 2 capital in accordance with Article 30 paragraph 2 is excluded as regulatory capital for a period of five years up to one year before final maturity, it can be recognised in the same way as bail-in bonds in accordance with international standards, provided tha
Art. 127a — Inserted by No I of the O of 11 May 2016, in force since 1 July 2016 (AS 2016 1725). Para. 1 — Amended by No I of the O of 27 Nov. 2019, in force since 1 Jan. 2020 (AS 2019 4623). Para. 1bis — Inserted by Annex No 2 of the O of 23 Nov. 2022, in force since 1 Jan. 2023 (AS 2022 804). Para. 2 — Amended by No I of the O of 27 Nov. 2019, in force since 1 Jan. 2020 (AS 2019 4623). Para. 4 let. b — Amended by No I of the O of 27 Nov. 2019, in force since 1 Jan. 2020 (AS 2019 4623).
Chapter 3 Going-Concern Capital of the Bank
Amended by No I of the O of 11 May 2016, in force since 1 July 2016 (AS 2016 1725).
Art. 128 Principle
1 Systemically important banks must hold sufficient capital to continue operating even in the event of major losses. 2 Required capital shall be calculated according to: a. the leverage ratio; and b. the share in total risk-weighted assets under Article 42b (RWA ratio).
Para. 2 let. b — Amended by No I of the O of 29 Nov. 2023, in force since 1 Jan. 2025 (AS 2024 13).
Art. 129 Total capital requirement
1 The total capital requirement is made up of a base requirement plus surcharges for market share and bank size as measured by total exposure. 2 The base requirement shall amount to: a. 4.5% for the leverage ratio; b. 12.86% for the RWA ratio. 3 For the purpose of determining the surcharges, FINMA shall periodically allocate the banks to «buckets» according to their market share and total exposure. The relevant values and the surcharges are set down in Annex 9. The surcharges shall be determined annually at the end of the second quarter. 4 Market share is determined using whichever is the higher of the average market share in domestic lending business and the market share in domestic deposit-taking business based on the Swiss National Bank's statistical surveys on the reporting date at the end of the previous calendar year. 5 The FDF shall regularly review the values and surcharges set down in Annex 9 against system stability and the competitiveness of the systemically important banks,
Para. 5 — Inserted by No I of the O of 27 Nov. 2019, in force since 1 Jan. 2020 (AS 2019 4623).
Art. 130 Minimum capital and capital buffer
1 Systemically important banks shall permanently hold minimum capital amounting to: a. 3% for the leverage ratio; b. 8% for the RWA ratio. 2 In addition, they shall hold a capital buffer up to the amount of the total requirement. 3 The capital buffer should be complied with at all times. Temporary shortfalls are permitted in the event of bank losses. 4 If there is a temporary shortfall in the capital buffer, the bank must demonstrate what measures will be taken to restore it and by what deadline. FINMA shall approve the deadline. If the capital requirements are not met after the deadline has expired, FINMA may order the necessary measures.
Art. 131 Capital quality
The capital used to meet the requirements must be of at least the following quality: a. leverage ratio requirement: 1 Minimum capital: CET1 capital; to meet the minimum capital requirement, a maximum of 1.5% may be used as AT1 capital in the form of convertible capital that is triggered if the eligible CET1 capital falls below 7% of the RWA ratio (high-trigger convertible capital), 2 Capital buffer: CET1 capital; b. RWA ratio requirement: 1 Minimum capital: CET1 capital; a maximum of 3.5% may be used as AT 1 capital in the form of high-trigger convertible capital to meet the minimum capital requirement, 2 Capital buffer: CET1 capital; a maximum of 0.8% may be used as AT1 capital in the form of high-trigger convertible capital to comply with the capital buffer.
Art. 131a Countercyclical buffer
In addition to the capital requirements as a measure of risk-weighted assets under this Title, the countercyclical buffer under Articles 44 and 44a shall be complied with.
Art. 131a — Amended by No I of the O of 29 Nov. 2023, in force since 1 Jan. 2025 (AS 2024 13).
Art. 131b Additional capital
In special circumstances, FINMA may require individual banks to hold additional capital according to the criteria under Article 45, or may set higher quality requirements.
Chapter 4 Additional Loss-Absorbing Funds
Originally before Art. 133. Amended by No. I of the O of 11 May 2016, in force since 1 July 2016 (AS 2016 1725).
Art. 132 Principle
1 Systemically important banks must permanently hold additional funds to ensure resolution in accordance with Sections 11 and 12 of the BankA., 2 The requirement concerning these additional funds is based on the total requirement, comprising the base requirements and surcharges under Article 129. It shall amount to: a. for an internationally active systemically important bank: 1 for entities performing systemically important functions (Art. 124 para. 3 lit. a): 62% of the total requirement at the level of the financial group and the individual entity, 2. at the level of the highest entity in a financial group (Art. 124 para. 3 lit. b) and significant subordinate financial groups (Art. 124 para. 3 lit. c), unless the requirements under No 1 apply: 75% of the total requirement, 3 at the level of the individual entity under Article 124 paragraph 3 letters c or d, the sum of: – the nominal amounts of additional loss-absorbing funds passed on to subsidiaries – 75% of the total requirement,
Art. 132 — Amended by No I of the O of 21 Nov. 2018, in force since 1 Jan. 2019 (AS 2018 5241). Para. 1 — SR 952.0 Para. 1 — Amended by Annex No 2 of the O of 23 Nov. 2022, in force since 1 Jan. 2023 (AS 2022 804). Para. 2 let. b — Amended by Annex No 2 of the O of 23 Nov. 2022, in force since 1 Jan. 2023 (AS 2022 804). Para. 3 — Amended by Annex No 2 of the O of 23 Nov. 2022, in force since 1 Jan. 2023 (AS 2022 804). Para. 5 — Repealed by Annex No 2 of the O of 23 Nov. 2022, with effect from 1
Art. 132a Special provisions for internationally active systemically important banks
1 If an internationally active systemically important bank holds the additional funds in the form of CET1 capital or convertible capital that meets the requirements for AT1 capital, this capital shall receive preferential treatment within the meaning of Article 132 paragraph 4, up to a maximum of 2% for the leverage ratio and up to a maximum of 5.8% for the RWA ratio. 2 For entities under Article 124 paragraph 3 letters b to d, the level of the additional capital requirement taking account of the reduced requirements under paragraph 1 must not fall below 3.75% for the leverage ratio and 10% for the RWA ratio.
Art. 132a — Inserted by No I of the O of 21 Nov. 2018 (AS 2018 5241). Amended by Annex No 2 of the O of 23 Nov. 2022, in force since 1 Jan. 2023 (AS 2022 804).
Art. 132b Special provisions for banks with a state guarantee or similar mechanism
If a non-internationally active systemically important bank benefits from an explicit state guarantee or similar mechanism, the requirement under Article 132 paragraph 2 letter b, in the amount of the guarantee: a. shall be deemed to be met up to a maximum of half the required 40%; b. shall be deemed to be fully met if, in a crisis situation, the corresponding funds are available unencumbered to FINMA irrevocably and rapidly; FINMA shall decide whether these criteria are met on a case-by-case basis.
Art. 132b — Inserted by Annex No 2 of the O of 23 Nov. 2022, in force since 1 Jan. 2023 (AS 2022 804).
Art. 133 Tier 2 additional loss-absorbing funds for internationally active systemically important banks
In the event of obstacles to resolution for entities under Article 124 paragraph 3 letters b to d, FINMA may, under Article 65b paragraph 1 BankO, require internationally active systemically important banks to hold Tier 2 additional loss-absorbing funds. The amount of such funds shall be limited to 25% of the total requirement. Article 132 paragraph 4 shall apply by analogy.
Art. 133 — Amended by Annex No 2 of the O of 23 Nov. 2022, in force since 1 Jan. 2023 (AS 2022 804). SR 952.02
Art. 134 and 135
Repealed
Chapter 5 Special Risk Diversification Requirement
Art. 136 Risk concentrations
1 In derogation from Article 95 paragraph1, a risk concentration shall exist when the total exposure to a counterparty or group of connected counterparties equals or exceeds 10% of the bank's adjusted eligible Tier 1 capital under Articles 31 to 40 that is not used to meet the requirements on additional loss-absorbing funds. 1bis A risk concentration must not exceed 25% of the Tier 1 capital under paragraph 1. 2 A risk concentration must not exceed 15% of the Tier 1 capital under paragraph 1 in the case of: a. exposures to other systemically important banks under Article 8 paragraph 3 BankA; b. exposures to foreign systemically important banks that have been designated as global systemically important banks by the Financial Stability Board. 3 The upper limit under paragraph 2 must be complied with at the latest twelve months after: a. the designation of a bank as systemically important under Article 8 paragraph 3 BankA; b. the designation of a foreign bank as a global systemically impo
Art. 136 — Amended by No I of the O of 22 Nov. 2017, in force since 1 Jan. 2019 (AS 2017 7625). Para. 1 — Amended by No I of the O of 29 Nov. 2023, in force since 1 Jan. 2025 (AS 2024 13). Para. 1bis — Inserted by No I of the O of 29 Nov. 2023, in force since 1 Jan. 2025 (AS 2024 13). Para. 4 — Amended by No I of the O of 29 Nov. 2023, in force since 1 Jan. 2025 (AS 2024 13).
