The Swiss National Bank’s 2025 Financial Stability Report, released on 19 June 2025, paints a picture of rising economic uncertainty fuelled by geopolitics and trade tensions. Global debt levels close to record highs, stretched valuations in real estate, corporate bonds, and U.S. equities all contribute to a fragile international landscape that could amplify financial shocks. For Switzerland, the SNB notes that low interest rates may have fuelled risk-taking in mortgages and real estate, vulnerabilities that warrant careful monitoring.
Despite these headwinds, Switzerland’s banking sector showed improved profitability in 2024, largely thanks to UBS, and maintained solid capital ratios and substantial liquidity buffers. That said, UBS remains exposed to sizeable potential losses in stress scenarios. To address this, both the SNB and the government support new reforms requiring full CET1 capital deductions for UBS’s foreign participations – a measure seen as essential for system resilience.
Regulatory and compliance teams within Swiss banks must now prepare for more rigorous frameworks, focusing on capital adequacy across complex group structures and ensuring foreign currency liquidity buffers are maintained . Stress-testing protocols should also be recalibrated to reflect external shocks like trade disruptions, sovereign debt crises, or asset price corrections.
For financial institutions and SMEs in the BFSI sector, this environment highlights both risks and opportunities. Firms offering risk management, stress‑testing software, or liquidity planning tools may find growing demand as banks seek to shore up their defences. Meanwhile, advisory and consulting services that help implement Basel III reforms and regulatory adjustments will be vital to enabling compliance and strengthening financial stability.
In sum, the SNB’s report underscores a complex interplay between international uncertainty and domestic financial resilience. For BFSI organisations, strengthening capital frameworks, stress‑testing capabilities, and liquidity management isn’t just prudent, it’s essential for navigating the evolving risk landscape.
