FINMA signs off on emergency plans of Zuercher Kantonalbank

ZURICH (Reuters) - Zuercher Kantonalbank's (ZKB) emergency plans to maintain its critical functions for the broader economy in case of insolvency are ready, Swiss financial market supervisor FINMA said on Tuesday following an annual assessment of risk preparations.

FINMA reviewed the emergency and recovery plans of Switzerland's three domestic systemically important banks - PostFinance, Raiffeisen and ZKB.

FINMA, which has come under fire over its handling of the Credit Suisse crash last year, said ZKB's emergency plan was ready to be implemented for the first time, after the state-owned lender issued additional loss-absorbing bonds in 2023.

But PostFinance's emergency plan was still not ready, FINMA said.

"PostFinance still does not fulfil the requirements regarding additional loss-absorbing funds, but has now submitted a binding plan to build up these funds," FINMA said.

Raiffeisen's emergency plan was deemed sufficient last year, which remains the case, FINMA said.

FINMA made the assessment after its annual review of the banks' emergency and recovery plans, where the lenders had to show how they would maintain their systemically important functions if they were at risk of insolvency.

The systemically important functions cover the short-term lending business at Raiffeisen and ZKB as well as the deposits business and payment transactions at PostFinance, Raiffeisen and ZKB.

All three satisfied FINMA with their recovery plans, which have to show how they could stabilise themselves without government intervention in the event of a crisis.

(Reporting by John Revill; Editing by Miranda Murray)