3 Sustainability in the financial sector
Due to its balance sheet volume and its contribution to net interest income, the lending business will play an important role in SZKB’s business model. The Bank focuses on business with private clients, small and medium-sized enterprises and public-sector companies primarily in the Canton of Schwyz and neighbouring economic areas.
As the largest lender in the Canton, SZKB plays a key role in the sustainable development of the Schwyz economic region and assists private, commercial and corporate clients over generations. With its lending policy, SZKB has a direct impact on the environment, society and the economy.
Credit checking and approval at the individual loan level follow a systematic process with clear directives regarding creditworthiness and eligibility. If SZKB does not consider a potential client to be creditworthy, it will refrain from granting a loan. Likewise, if the Bank does not know the purpose of the loan and cannot understand it, plausibly explain it or transparently present the transaction.
When granting mortgage loans and unsecured loans, SZKB pays attention to medium and long-term affordability. The Bank applies lending principles and affordability calculations that take risk into account.
Clients with higher risks of default are closely monitored by a specialised team and supported with suitable measures if possible. When assessing business and corporate loans, SZKB takes into account whether the borrower’s business model is geared towards long-term success, including consideration of environmental and reputational risks. SZKB finances companies that produce renewable energy (district heating and hydro power in particular), small solar power installations and energy-related renovations in private households as well as in the commercial and corporate client segment, and non-profit housing developers, among others.
Due to the business area defined objectively and geographically in the Schwyzer Kantonalbank Act, SZKB does not provide financing for fossil-fuel power generation projects abroad that are particularly harmful to the climate. For this reason, SZKB does not finance any tar sands oil extraction projects, Arctic oil and ultra-deep-water oil extraction projects or lignite and bituminous coalmining projects.
SZKB’s lending activities traditionally focus on clients domiciled in Switzerland and primarily on the Canton of Schwyz and neighbouring economic areas. SZKB grants 68% of its client loans in the Canton of Schwyz, with 65% relating to financing for private clients and 35% relating to financing for commercial and corporate clients.
SZKB’s local roots help it to thoroughly assess the opportunities and risks of its commitments, as the Bank has a high level of knowledge about the borrower’s environment and the properties involved.
The Guarantee Fund is a Cantonal institution with a legal entity and its registered office is in Schwyz. The purpose of the fund is to provide guarantees for loans, credits and guarantees for natural and legal persons resident or domiciled in the Canton of Schwyz who prove to be creditworthy and trustworthy. The fund is used to guarantee loans, credits and guarantees for which no or no fully bankable cover can be provided and which are needed for the following purposes:
- For the acquisition, construction, maintenance and improvement of residential buildings, condominiums, and commercial and agricultural real estate (real estate loans)
- For the construction, maintenance, improvement and expansion of service enterprises as well as commercial, industrial and agricultural businesses (operating loans)
- For start-up and venture financing of companies
SZKB is responsible for reviewing applications and processing such loans.
The SZKB Innovation Foundation exists in the Canton of Schwyz to promote innovative and young companies (see Chapter 11.7 Fostering innovative and young companies).
In June 2022, the Swiss Bankers Association (SBA) published a new directive for mortgage providers in order to encourage energy efficiency. According to this directive, it is necessary for mortgage providers to address the longterm preservation of value and the energy efficiency of the building to be financed when advising private individuals with owner-occupied single-family and holiday houses to be financed.
Taking into account a handover deadline, the directive is to be implemented by 1 January 2024. SZKB has initiated a project to implement this directive. In addition to development of new products and services, the project will ensure additional training for client advisors on how to preserve value and improve the energy efficiency of properties over the long term.
SZKB welcomes the SBA’s new directive, as it sees great potential for reducing CO2/carbon emissions in the Canton of Schwyz in the sustainable renovation of the properties financed by the Bank.
SZKB currently has a rough estimate of how high the greenhouse gas emissions are due to the outstanding real estate loans. Over the next one to two years, SZKB will examine how the corresponding data quality can be improved and how greenhouse gas emissions can be measured for corporate loans. SZKB will also examine how sustainability criteria can be increasingly incorporated into lending decisions and whether products with an environmental impact can be launched.