Banking and payment transactions

Transcription

1 compendio Banking and payment transactions Updates edition 2012 February 2015

2 Blended learning material co-developed by Compendio and Crealogix Technical coaching: CYP, Center for Young Professionals in Banking Licences for e-learning material available from Crealogix Banking and payment transactions Updates edition 2012 February 2015 Design and layout: Mediengestaltung, Compendio Bildungsmedien AG, Zurich Printing: Edubook AG, Merenschwand Text and educational editing: Fabienne Thiemeyer Article number: Update Legal deposit: 3 rd edition 2015 Edition: U1025 Language: EN Code: CYP All reproduction, translation and adaptation rights reserved. The content of this work is an intellectual creation protected under Swiss copyright law. Use of the content of this work for teaching purposes is subject to strict legal conditions. It is prohibited to photocopy or circulate on the school s internal servers a digital version of whole chapters or the entire content of a published work for information or documentation purposes. Only short passages of the work may be used in this way. It is also prohibited to make excerpts of this work available to outside third parties. Doing so is a violation of the rights of the author(s) and of the publisher and is a punishable offence. Any use of this work, in part or in whole, in photocopied, digital or any other form, for purposes other than teaching requires the express written permission of Compendio Bildungsmedien AG. Copyright 2013, Compendio Bildungsmedien AG, Zurich

3 The banking sector is constantly evolving, which means that Banking Today 2.0 training course content needs to be updated annually. We believe it is essential to offer up-to-date learning material. In view of this commitment, Compendio Bildungsmedien will publish an updated and revised edition of Banking Today 2.0 at the beginning of every school year. This present update provides the most current information possible to those who purchased the 2012 edition. This edition will be updated and published in early February for three consecutive years on the Banking Today website ( This method ensures that all modifications and additions to learning content are available to students preparing for final examinations in spring and summer. Tip: For study purposes, we recommend that you review these new modifications and additions as soon as possible and incorporate them into the learning material. This will give you an initial overview of the changes and make it easier to retain them Swiss National Bank statistics and bank categories Other banks Swiss National Bank statistics and bank categories Banking 1: Introduction to the World of Banking In June 2013, PostFinance AG received a licence from FINMA to operate as a bank and securities dealer. The Swiss National Bank has assigned PostFinance to the bank group other banks. The banks Pictet et Cie. and Lombard, Odier, Darier, Hentsch & Cie. have changed their legal form to that of a Swiss partnership limited by shares and therefore no longer form part of the group of private bankers. Examples replaced by the banks Bordier & Cie. and Reichmuth & Co. 2.4 SIX Group Ltd SWX Group, Telekurs Group and SIS Group are merging to create Swiss Financial Market Services and will operate under the brand SIX Group. SIX Group Ltd is currently active in the following four business areas: Securities trading (Swiss Exchange) Securities services (Securities Services) Financial information (Financial Information) Payment transactions (Payment Services) 3.1 The financial centre The significance of the banks for the Swiss economy The following figures underline the significance of the banks for the Swiss economy: The banks are a major employer. More than 100,000 people work in the banking industry in Switzerland. That is more than 3% of the work force in Switzerland. The banks account for more than 10% of the total Swiss economic output. 3

4 3 The Swiss financial centre 3.2 Bank-client secrecy Figure 17 Answers Solution to task 8 A Banking 1: Introduction to the World of Banking Change to the legal representatives right to information: Legal representatives: In the case of adolescents, the parents or guardians are the legal representatives. The latter are appointed by the relevant child protection authority if both parents have died or where custody rights have been withdrawn. In the case of adults, a legal representative is appointed if they are unable to look after their own affairs due to mental handicap, physical disability or similar debility. This deputy is provided by the adult protection authority. This organisation also determines to what extent the deputy should look after the affairs of the person supported. Spouses/common-law partners: In principle, spouses/common-law partners are not mutual legal representatives. A spouse/common-law partner must grant the other a power of attorney if he/she wants to give him/her access to his/her banking details. Today, the law permits designation of power of attorney. Here, someone appoints a representative in case, for example, he/she ceases to be of sound mind as a result of an accident. This representative can be the partner or another person. The bank will accept this person as a representative if he/she produces an order from the adult protection authority. One spouse/common-law partner has a statutory power of attorney if the other ceases to be of sound mind, for example, and there is no designation of power of attorney. However, the bank will also only accept him/her as a representative in this case if he/she produces an order from the adult protection authority. Please note: The bank should not provide a spouse/common-law partner with any information about the accounts of his/her partner without a power of attorney, an official order or a binding judicial ruling. The fact that the partners have undertaken to provide each other with information about income, assets and liabilities changes nothing as far as the bank is concerned. Corporate banks as a sub-group were removed from the statistics. Therefore, the correct solution is as follows: A] This category, which includes several different banks, is divided into sub-categories: corporate banks which are universal and operate primarily in large Swiss cities; banks which specialise in securities trading and wealth management, and foreign-controlled banks, most of which specialise in investment banking and wealth management for clients based abroad. Lastly, the other category includes establishments such as WIR-Bank and cashgate AG Civil law Guardianship law International agreements US withholding tax Banking 2: Banking regulation, compliance, annual financial statements and risk management Change in civil law The guardianship law is now called the law on the protection of adults (CC Art ). The law on the protection of adults deals with people who are incapable of acting for themselves due to age, illness or other reasons. They are placed under the care of a deputy who assists them or even acts on their behalf. The adult protection authority determines the extent to which the legal representative may manage the affairs of the person for whom they are acting as a deputy. New Law: FATCA (Foreign Account Tax Compliance Act) The Agreement between Switzerland and the USA for Cooperation to Facilitate the Implementation of FATCA entered into force on 2 July The USA s objective is to prevent tax evasion and to identify and tax all the global income and assets of natural persons and legal entities subject to taxation in the USA and holding accounts abroad. 4

5 2.4 Banking Act provisions on liquidity 2.5 Capital adequacy regulations Required capital and disclosure requirement Special regulations for the universal banks Liquidation of a bank Which claims are privileged 2.6 Bank bankruptcy Deposit protection 2.6 Bank bankruptcy Deposit insurance for preferential claims 3.1 A bank s financial statements Banking 2: Banking regulation, compliance, annual financial statements and risk management Amendment of liquidity regulations Since June 2010, system-relevant banks have been subject to tightened liquidity regulations as part of Swiss "Too Big to Fail" legislation. These regulations incorporate the proposals of the Basel Committee (Basel II). In accordance with them, system-relevant banks must have sufficient liquid capital to cover cash outflow for 30 crisis days from their own resources. From 2015 these regulations (Liquidity Coverage Ratio, LCR) are to apply to all banks. The minimum standards of Basel III will therefore be implemented and adopted into the revised Liquidity Ordinance. Implementation of the new Basel III regulations Under Basel III, capital is now subdivided into core capital (common equity and additional core capital) and supplementary capital. As a minimum requirement, a bank is now requested to hold capital at a level of 10.5%. In addition to this minimum capital, banks must also maintain a so-called capital buffer and additional capital. The Swiss National Bank can also oblige banks, via the Federal Council, to top up their capital by creating a countercyclical capital buffer. Special regulations for systemically important banks. At the end of 2014, Credit Suisse, UBS, Zürcher Kantonalbank and Raiffeisen were deemed systemically relevant. A change in the legal situation affects metal accounts. The latest position is that metal accounts where the client is not the owner of the metal but merely has a claim against the bank in respect of precious metal issues are not privileged. Details on the difference between privileged and secured claims: The following preferential deposits are protected: Balances of private individuals, commercial enterprises and public-sector offices; e. g. personal accounts, savings accounts, investment accounts, salary accounts, numbered accounts, deposit accounts and current accounts. Medium-term notes (Kassenobligationen) held in the name of the bearer at the issuing bank. To ensure that this obligation does not lead to a chain reaction of bankruptcies, the total payment is limited to a maximum of CHF 6 billion. The banks pay out this money to the deposit insurance association in proportion to their own preferential claims in the event of a bankruptcy. The Swiss Banks and Securities Dealers Deposit Protection Association is now operating under the name esisuisse. All banks and securities dealers in Switzerland are obliged to provide deposit insurance. Deposit insurance is provided by an association trading as esisuisse. All esisuisse members sign the Agreement ( Agreement of Swiss banks and Securities Dealers on the deposit insurance ). If a bank or securities dealer in Switzerland goes bust, the other esisuisse members immediately make the necessary funds available. Change to accounting regulations: As a new requirement from 2015 onwards, all banks will have to prepare and publish not only annual financial statements but also six-monthly interim financial statements comprising a balance sheet and an income statement. A statement of changes in equity will also be a new component of the annual financial statements. 5

6 Answers Solution to task 7 C Answers Solution to task 8 B Banking 2: Banking regulation, compliance, annual financial statements and risk management Answer 7 C Banking legislation contains the following two methods of paying out the preferential claims as quickly as possible: Small deposits are paid out of the liquid assets immediately outside the bankruptcy proceedings. FINMA will stipulate the amount concerned in the event of bankruptcy. Deposit insurance applies to the other preferential claims (esisuisse). This requires banks operating in Switzerland to settle preferential claims up to a maximum CHF 100,000. Answer 8 B The Platinum metals account is not a preferential claim. 2 nd class Current account CHF 14, Gift savings account CHF 21, Escalator savings account CHF 36, Medium-term note CHF 45, Total 2 nd class CHF 117, Maximum amount CHF 100, Transfer to 3 rd class CHF 17, rd class Transfer from 2 nd class CHF 17, Total 3 rd class CHF 17, Money Laundering No corrections identified Deposit Services No corrections identified Basic Services Travel Cash The Travel Cash card has a validity period. This is indicated on the card. Cards that do not have a validity period printed on them expire five years after the last loading or purchase transaction. When the card expires, the credit is not lost. Any remaining credit is transferred to a new card or, subject to a charge, into an account designated by the cardholder. Thanks to the MasterCard logo on the Travel Cash card, clients can now use it like a credit card for cashless payments in over 35 million shops, hotels and petrol stations worldwide as well as on the Internet. 2.2 Payment processing in Europe The Swiss Euro Clearing Bank (SECB) To be correct, the paragraph should read: Because it is not a member of the European Union (EU), Switzerland is not directly connected to European payment systems. For this reason, the Swiss Euro Clearing Bank (SECB) was created. Based in Frankfurt am Main, the SECB has access to European payment systems, and processes Swiss payments in euro via the eurosic system. The participants (instead of Swiss member banks ) hold a settlement and clearing account. 6

7 Basic Services 2.4 SIX Group Entire excursus deleted. All of the SIX Group s business areas have been operating under the SIX brand since April As part of the re-branding operation, the three companies SIX Multipay, SIX Card Solutions and SIX Multi Solutions in Switzerland were merged to create SIX Payment Services Ltd. 2.2 The current monetary policy of the SNB Figure 10 three-month Libor The Swiss National Bank The Libor (London Interbank Offered Rate) is now determined daily in London by a subsidiary of NYSE Euronext. 7