Swiss Press Ahead With Tighter Capital Rules for Top Banks
Swiss Press Ahead With Tighter Capital Rules for Biggest Banks
(Bloomberg) --
Switzerland is pressing ahead with revised capital standards for its biggest banks, with rules that are expected to force UBS Group AG and Credit Suisse Group AG to set aside an additional 24 billion Swiss francs ($24 billion) in reserves.
To ensure the parent companies of systemically important institutions are sufficiently well capitalized in the event of a crisis, the government is revising bank capital rules effective Jan. 1, according to a spokeswoman for the Swiss State Secretariat for International Finance. The banks will have five years to comply with the new regulations.
“The additional funds the two big banks need to absorb the losses amount to a total of approximately 24 billion francs,” according to an explanatory report on the revised law.“These must issue new lease-in bonds to the level of their holding for a similar amount.”
A UBS spokesman said the bank had taken note of the development and that the change had already been reflected in its capital plans. Credit Suisse said in a statement that the additional requirements came “as no surprise” and are already part of the bank’s capital planning.
Swiss authorities want to further tighten capital requirements because they are worried that in the event of another financial crisis large parts of big banks’ capital cushions could be reserved for foreign locations such as the U.S. or the U.K. and that there may not be enough left for Switzerland, Swiss media reported when the plans were first floated.
The total refinancing costs for the two banks could increase each year by as much as 170 million francs, according to the report.
The proposed change was announced earlier this year. The government also said it was simplifying capital requirements for certain small banks and securities firms.
To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net
To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Christian Baumgaertel
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