Swiss banks: the SNB offers reassurance, but property remains the Achilles’ heel

The message is reassuring, but it is not triumphalist. In its 2026 Financial Stability Report, the Swiss National Bank assesses that the Swiss banking sector is, on the whole, well equipped to cope with a crisis. According to the SNB, the banks have substantial capital and liquidity, and most are resilient to the stress scenarios examined.

For SMEs, the self-employed and finance departments, the implications are clear: a robust banking sector generally means more predictable access to credit, liquidity facilities, guarantees and payment services. However, the SNB also points out that the property and mortgage market remains fragile. In Switzerland, this market has a direct impact on businesses: financing of premises, rents, guarantees, asset valuations and the financial health of household customers.

Banks deemed sound in an environment that is not

The SNB does not paint a rosy picture. According to reports by RTS, it emphasises that the economic and financial environment remains challenging for the Swiss financial sector, due in particular to the conflict in the Middle East, tensions relating to international trade, and the resulting geopolitical and macroeconomic uncertainties. In other words: banking resilience is assessed against a backdrop of instability, not during a period of calm.

Banking resilience refers to an institution’s ability to absorb losses, maintain sufficient liquidity and continue its core activities even when a shock occurs. For a business, this boils down to a simple question: will the bank be able to continue financing the economy if markets become strained, if interest rates fluctuate sharply or if customers encounter difficulties?

According to the Swiss Bankers Association, which has commented on the SNB’s report, Swiss banks’ capitalisation, liquidity and loss-absorption capacity are generally sound. The stress tests carried out by the SNB indicate that most banks focused on the domestic market should be able to weather crisis scenarios without reducing their lending or bolstering their capitalisation, according to RTS.

This is important for SMEs. During an economic slowdown or a period of high uncertainty, a business may need to refinance an investment, extend a credit line, obtain a bank guarantee or simply bridge a cash flow gap. If banks are simultaneously forced to take urgent measures to protect their balance sheets, credit may become scarcer or more expensive. The SNB’s current assessment suggests that this systemic risk is not the central scenario, even if it has not disappeared.

UBS, PostFinance, Raiffeisen: profitability remains under close scrutiny

UBS’s situation features prominently in the analysis, given its size and importance to the financial centre. According to RTS, UBS’s profit-making capacity continued to grow in 2025, driven by wealth management and investment banking. Its Swiss operations, however, saw a decline in profitability, affected by the fall in net interest income.

Bank profitability is not just a matter for shareholders. It also determines a bank’s ability to build up reserves, absorb losses and continue to provide financing. In principle, a profitable bank has greater scope to invest in its systems, manage its risks and support its customers. However, profitability that is overly dependent on certain activities can also create specific vulnerabilities.

Among other systemically important banks, RTS reports that the profitability of PostFinance and Zurich Cantonal Bank increased last year, whilst that of the Raiffeisen Group declined. Capital ratios have generally strengthened across the Swiss banking sector as a whole.

The so-called ‘too big to fail’ framework remains at the centre of the debate. It targets institutions whose failure could threaten the economy and the financial system. Following the collapse of Credit Suisse, the requirements have been tightened, notably to better cover the risks associated with UBS’s holdings in its foreign subsidiaries. According to RTS, UBS already exceeds the strengthened requirements, which will come into full effect from 2030. However, the issue remains a political and regulatory one: UBS CEO Sergio Ermotti stated in early June that the bank would accept and comply with Parliament’s decision on this matter, reports RTS.

For an SME, these discussions may seem far removed. They are not entirely so. Higher capital requirements can influence banks’ cost of capital, their appetite for certain risks and, indirectly, the terms offered to businesses. Conversely, under-capitalised banks can become a source of instability. Striking the right balance between financial security and financing capacity therefore remains a major economic challenge.

The property sector highlights vulnerabilities that the SNB does not wish to downplay

The main warning concerns the residential property and mortgage markets. According to SwissBanking, the SNB emphasises that mortgage debt remains high and that residential property prices have recently regained momentum. The explanation put forward relates to a limited supply of owner-occupied housing in the face of strong demand, fuelled by population growth and low interest rates.

Watson, echoing the report’s findings, also notes that the outstanding volume of mortgage debt remains high and that mortgage debt levels signal an increased risk to financial capacity. The SNB also observes that residential property prices have risen both globally and in Switzerland.

The risk is not limited to private homeowners. Swiss banks with a strong presence in the domestic market are exposed to developments in the mortgage sector. According to RTS, they remain particularly vulnerable to an unfavourable combination of factors: a sharp rise in interest rates and a correction in property prices. Such a scenario could put pressure on collateral, borrowers’ creditworthiness and the quality of loan portfolios.

For businesses, there are multiple channels through which this could affect them. A rise in property costs could drive up commercial rents or put the brakes on expansion plans. A price correction could reduce the value of assets held as collateral. Tighter mortgage lending criteria could also affect the private clientele of certain SMEs, particularly in sectors linked to construction, property development, retail or local services.

A prudent approach is not to treat property as a secondary variable in the financial plan. Businesses considering purchasing premises, refinancing property debt or entering into a long-term lease would be well advised to test several scenarios: repayment capacity in the event of changes to financial costs, dependence on resale value, available cash flow, contractual clauses and operational flexibility. These simulations are no substitute for an individualised banking or tax analysis, but they prevent a project from being built on a single favourable scenario.

Liquidity: the true lifeblood of a banking crisis

The turmoil of 2022–2023 in Switzerland and the United States served as a reminder of a reality that is sometimes underestimated: equity capital is not enough if liquidity dries up too quickly. According to RTS, the SNB considers that rapid outflows of liquidity can deplete even substantial reserve buffers. It therefore deems it essential that banks have collateral available to secure, if necessary, liquidity support from the SNB or other central banks.

Liquidity refers to the ability to cope with immediate outflows of funds: customer withdrawals, market maturities, margin calls or operational requirements. For a bank, holding high-quality assets is not always enough; it must also be able to mobilise them quickly. For a business, the equivalent is very telling: a company may be solvent on paper, but find itself in difficulty if its cash inflows arrive too late to pay wages, suppliers or social security contributions.

This aspect should prompt managers to examine their own exposure to banks. This is not a matter of giving in to mistrust, but of understanding one’s dependencies: concentration of accounts with a single institution, availability of credit limits, loan maturities, guarantees already committed, and access to funds in the event of an operational problem. Diversifying banking relationships may be appropriate for some companies, but it also entails administrative costs and must be assessed on a case-by-case basis.

The SNB also draws attention to the growing influence of non-bank financial intermediaries. According to RTS, the assets of investment funds, pension funds and insurance companies accounted for 554 per cent of Swiss GDP at the end of 2025. SwissBanking also notes that the SNB is closely monitoring cyber risks, operational risks, the growing importance of non-bank institutions and stablecoins. This shows that financial stability is no longer determined solely by the balance sheets of traditional banks.

For SMEs, a reassuring signal but not an automatic green light

For the time being, the SNB’s report sends a rather favourable signal to businesses: the Swiss banking system possesses considerable resilience, despite a challenging international environment. SwissBanking sees this as confirmation that banks can continue to provide reliable financing to businesses and households, even under challenging conditions. The association also believes that additional capital requirements are not justified at this stage.

However, the climate for SMEs remains tense. The research report notes that the Neue Zürcher Zeitung’s SME Barometer 2026, as reported by the federal SME portal, shows an overall index of -7.3 points in the second quarter of 2026, its lowest level since the survey began in 2021. Geopolitical uncertainties, US trade policy and increased administrative burdens are weighing on the indicators. Even with sound banks, businesses may therefore be reluctant to invest or take on staff.

The correct interpretation of the report is not to conclude that the risk has disappeared. Rather, it is to distinguish between two levels: the banking system appears capable of absorbing significant shocks, but certain markets and business models remain vulnerable. An exporting SME does not face the same risks as a local tradesperson heavily reliant on the construction sector, a property company or a business financed by a seasonal line of credit.

In this context, management should prioritise transparent financial management: up-to-date budgets, interest rate scenarios, monitoring of bank covenants where they exist, clear documentation for credit applications, and planning ahead for financing renewals. It is advisable to prepare for discussions with the bank before cash flow becomes tight. A clean balance sheet, up-to-date accounts and realistic assumptions remain very tangible assets.

The Swiss banking sector therefore appears robust, but the robustness of a system does not exempt individual businesses from working on their own resilience. The SNB offers reassurance regarding the system’s overall capacity; it also points out that crises often arise at the intersection of finance, property, geopolitics and confidence. For SMEs, the sensible approach is to take advantage of this relative stability to strengthen their room for manoeuvre, rather than waiting for the next shock to seek it out.