Both banks’ capital ratios exceed requirements and are above average by international comparison. Thanks to these capital buffers, the two globally active banks are well placed to face today’s challenging environment. The direct impact of the war in Ukraine should be limited given the comparatively low exposure of Credit Suisse and UBS to the warring parties. However, an escalation of the war or a further widening of sanctions could adversely affect the economic environment and financial market conditions. The SNB addresses such adverse developments in its analysis of standard stress scenarios. This analysis shows that the loss potential for both banks remains substantial. Taking on risk is an integral part of the banking business. From the financial stability perspective, it is crucial that these risks be backed by sufficient capital. Our stress scenario analysis underlines that the ‘too big to fail’ capital requirements applicable to the systemically important banks in Switzerland are necessary to ensure adequate resilience at Credit Suisse and UBS. Domestically focused banks I shall now turn to the domestically focused banks. The profitability of these banks increased slightly in 2021. Improved cost efficiency and lower provisions for credit losses offset the decline in interest rate margins. As in previous years, the domestically focused banks improved their capital position by retaining earnings. Sustainable profits and large capital buffers are essential, as they allow banks to absorb losses and continue lending to the economy during periods of stress. Two sources of risk are of particular relevance for the domestically focused banks in the current environment.

Unfortunately, there are individuals who try to take advantage of owners of new businesses by providing them with poor advice or overcharging them for credit. Researching the backgrounds of these service providers and lenders is difficult and time intensive, leaving small business owners too often uncertain as to who to deal with. In some cases, this uncertainty can discourage a business owner from seeking assistance. I believe that we need a better system of certification for organizations that work with small businesses. The certification will assure a business owner that the organization has been properly vetted and has the requisite skills to assist the owner. This not only provides assurances to business owners, but saves them the time and resources required to do this due diligence on their own. Finally, in addition to certification, it would be helpful to have consistent standards and transparency requirements for organizations that lend to small businesses. Such standards and requirements exist for lending to households, and I believe the same justification exists to extend these requirements to small businesses. As a result, small business owners would have greater confidence that they fully understand the terms and conditions of their loan. This, in conjunction with the access to more financial information and education, will help small business owners make better decisions about their use of credit. Conclusion In summary, economic conditions in the Bronx are improving but more progress is necessary.