Capital adequacy
Requirement that banks and certain financial institutions hold enough own funds to absorb losses and support their risks.
Capital adequacy requires regulated institutions to maintain sufficient high-quality capital in relation to credit, market, operational and other risks. In Switzerland, banks and some securities firms are subject to risk-based and leverage-related own-funds requirements, influenced by international Basel standards and Swiss supervisory rules. Adequate capital protects depositors, clients and financial stability by absorbing losses before insolvency. Requirements vary with size, business model and systemic importance. Supervisors may require additional capital where risks, governance or stress-test results justify it.