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6 Int'l Fin. L. Rev. 29 (1987)
Legislative Developments in Swiss Banking

handle is hein.journals/intfinr6 and id is 31 raw text is: Legislative developments in Swiss banking How have the new developments in Swiss banking law affected issues such as the Marcos case? By Edmond Thvernier of Thvernier, Gillioz, de Preux, Dorsaz in Geneva In December 1982, the Federal Department of Finance submitted a preliminary draft for a complete revision of the Federal Bank Law of 1934 (see K Hauri, Ausblick auf das neue Bankengesetz in '50 ans de surveillance bancaire', Zuirich 1985 p177 ff). In May 1984 the Federal Council decided that the Law would be revised only in part, and a new preliminary draft was drawn up. Unlike the present Law, the draft Law contains a definition of a bank as an enterprise which is engaged, for its own account, in the busi- ness of accepting funds from an indeterminate number of customers with the intention of lending funds to an indeterminate number of borrowers. Customer funds are judged to be accepted on bank- ing terms and conditions if funds received from an indeterminate number of customers are deposited in accounts or if funds are received in exchange for cer- tificates of deposit or cash bonds (Article 3 parag- raph 1). The issuance of long-term bonds is not con- sidered as an acceptance of funds on banking terms and conditions. Anti-avoidance provision Article 1 paragraph 3 of the draft Law provides that enterprises or persons not subject to the Law cannot be authorised to accept funds from customers on banking terms and conditions. Either an enterprise defined as a bank is entirely subject to the Law and authorised to carry out borrowing and lending oper- ations with an indeterminate number of persons, or else it is not subject to the Law, in which case it can- not accept funds on banking terms and conditions. To prevent foreign banks trying to avoid the Law by setting up financial companies in Switzerland wholly financed by their parent companies and not by banking means, the draft Law will encompass companies dependent on foreign banks in Switzer- land, if their purpose is to finance other enterprises by granting loans or acquiring equity. Authorisation. The draft Law will not alter the legal requirements to be met to obtain a licence for the exercise of banking activities. On bank organisa- tion, the draft Law specifies that the bank's statutes, articles of association and internal regulations must define accurately the establishment's field of activity (Article 5). All banks have to set up two distinct bodies responsible for running the enterprise: a management body and a Board of Directors, the lat- ter being the highest decision-making authority and in charge of supervision and control. This distribu- tion of tasks is intended to ensure the bank's approp- riate internal control. The two bodies will be totally separate with no members in common. If the extent International Financial Law Review January 1987 or the nature of operations require it, affairs will have to be run on a collective basis, so ensuring a cer- tain degree of supervision.This last requirement has been criticised mainly because it would lead to con- siderable uncertainty (see above all H Schoenle, 'Le champ d'application de la loi et les conditions d'autorisa- tion' in Colloque, l'avant-projet de la loi federale sur les banques, Geneva, 1983, p16). Banking operations can- not be run in the form of an association or a founda- tion (Article 10). All other legal forms will continue to be authorised. Article 11 of the draft Law continues the require- ment that for the authorisation of staff persons entrusted with the running of the bank can at all times furnish the guarantees of 'irreproachable con- duct of activity'. What matters are not just profes- sional qualifications and personal qualities, but also the type and extent of the operations and manage- ment of the establishment. Under the terms of Article 12, members of manage- ment and of the internal audit group are not allowed to have other profit-making activities outside the bank, unless authorised to do so by the Board of Directors, while Article 13 imposes on management members the obligation of being domiciled in Swit- zerland. The bank can only be committed by a joint signature (Article 14 paragraph 1), which is consis- tent with the existence of collective management. However, this requirement does not apply to forms and other documents of daily correspondence. Arti- cle 15 provides that any persons having an interest of at least 10 per cent in the share capital of a bank must furnish that information to the Federal Banking Commission. This obligation of disclosure applies to shareholders as well as to the bank itself. Foreign banks Under the terms of the Law now in force, a bank organised under the laws of Switzerland is deemed to be a 'foreign bank' when foreign equity holdings, whether direct or indirect, exceed 50 per cent of its share capital or votes, or when the bank is in some other way controlled by foreign nationals. Under Article 16 paragraph 1 of the draft Law, foreign banks include branch offices in Switzerland of foreign-based banks and banks organised under Swiss law but directly or indirectly under the predo- minant influence of foreign nationals, either through a controlling interest or in some other way. The notion of predominant foreign influence is difficult to define (see A Levy, 'Les conditions d'autorisation et les rtgles particulieres applicables aux banques domindes par l'dtranger' in Colloque international,

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