FINMA highlighted the proportionality principle at its Small Bank Symposium, noting that criticism of overly intensive oversight of small institutions does not match its supervisory data. The regulator conducts more than 40 on‑site inspections of UBS each year, while a typical small bank is inspected only once every eight to ten years.
In 2025, FINMA performed twelve times as many on‑site inspections at banks rated medium or high risk compared with those rated low risk, underscoring the risk‑based focus of its supervision. Additional supervisory requirements apply to roughly 30% of guarantee applications from large banks, but to fewer than 10% of similar applications from small banks.
Enforcement actions also concentrate on the largest institutions. Over a ten‑year span, category 1 and 2 banks—representing about 2% of supervised entities—accounted for the majority of investigations and proceedings, indicating that small banks are not a disproportionate target.
FINMA’s small‑banks regime, introduced in 2020 and currently voluntary for 56 institutions, offers tangible relief. Participating banks, which must be liquid and well‑capitalised, are exempt from calculating risk‑weighted assets and the net stable funding ratio, and benefit from simplified reporting in risk management, internal audit and disclosure.
The regulator said the regime’s exemptions are conditional on soundness. For example, banks under the regime are exempt from the recent circular on nature‑related financial risks, again on proportionality grounds. Outside the regime, supervisory expectations still vary with size, complexity, risk profile and business model.
FINMA cautioned that proportionality has limits. Certain risks—money‑laundering, market conduct, sanctions, cyber threats and outsourcing—trigger the same supervisory standards regardless of institution size. The speech warned that growing reliance on external technology providers and artificial intelligence introduces concentration and automation risks that small banks must manage, even if their oversight framework differs from that of large banks.
Looking ahead, FINMA signalled that geopolitical tensions could affect Swiss‑focused banks through market volatility, sanctions and cyber exposure, and that these factors will shape future risk‑management discussions at the symposium.
