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24 September 2021 / news

FINMA Guideline - Changes of corporate bodies at banks

On 22 September 2021, the Swiss Financial Market Supervisory Authority (FINMA) published guidelines concerning changes in the persons entrusted with the administration and management of Swiss banks (FINMA Guidelines). The FINMA explain the procedure regarding changes of corporate bodies at banks, covering a general overview of the duration and the requirements in this procedure as well as the documents to be submitted.

finma-guideline

1. General Overview

On 22 September 2021, FINMA published guidelines concerning changes in the persons entrusted with the administration and management of banks (FINMA Guidelines) which explain the procedure regarding changes of corporate bodies at banks. A change of corporate body is generally understood to mean any change of members in the board of directors (BOD) and the executive board (EB) of banks.

Each member of the BOD or EB of a bank must enjoy a good reputation. In addition, an irreproachable business conduct must be permanently guaranteed.

If a member of a bank's BOD or EB is elected for the first time or if there is a change in function, FINMA must verify that the mentioned requirements are met. To meet these requirements, both the fitness for the specific function and the properness must be fulfilled.

2. Examination of fit and proper requirements (so called Gewähr)

FINMA assesses the properness (integrity) based on the following documents:

  • Analysis of the institution's details, CV and other sources for any negative indications;
  • Residence of the chairman or vice-chairman of the BOD in Switzerland;
  • If changes in the size of the BOD occur, it is examined whether this complies with any minimum or maximum sizes under the law, the articles of association or the organisational regulations; and
  • Compliance with the separation of powers for members of the BOD.

The examination of fitness (professional knowledge) is initially based on the clarifications of the respective bank and a subsequent assessment by FINMA based on the following documents:

  • Assessment of the institution's details and CV for management experience and sufficient knowledge and experience for the function;
  • Assessment of the overall composition of the BOD for expertise, experience and independence;
  • Assessing the institution's credentials for expertise and experience of the candidate for election to a risk and/or audit committee; and
  • Checking the availability of time and potential conflicts of interest in the event of other mandates and secondary occupations.


3. Documents to be submitted and decision

A change of corporate body shall be reported on FINMA's electronic platform (EHP) prior to making public the nomination or change. Given that FINMA may intervene if the fit and proper requirements are not fulfilled, reputational risks may arise if a change is made public before FINMA having conducted its assessment. In addition to the EHP notification, a range of documents must be enclosed for the candidate, e.g. a detailed CV, a criminal record extract and a declaration of other mandates and secondary employment.

FINMA normally decides on the case within 10 working days. In the event of a negative decision, the decision will be communicated in an appealable ruling at the request of the institution. In exceptional situations that so require and on request, FINMA may conduct a short preliminary assessment.

For more information see: FINMA Guidance (22 September 2021).

 

This article is written by Jan-Nicklas Bentz and Diana Lafita



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