Swiss to impose tougher capital requirements on UBS, Credit Suisse

The Swiss government said on Wednesday it would lay out tougher capital requirements for UBS (UBSG.VX) and Credit Suisse (CSGN.VX) by the year-end, in order to protect them against future crises.

Switzerland has been at the forefront of efforts by policymakers and regulators to ensure banks do not become so big and interconnected with the international financial system that they would need rescuing with taxpayer cash if they run into trouble.

Solving this "too big to fail" problem has been a priority for regulators in the United States and Europe after several banks, including Zurich-based UBS, were bailed out in the 2007-09 financial crisis.

"Additional measures and adjustments are required to boost the resilience of systemically important banks further and to make their restructuring or orderly resolution possible without taxpayers incurring any costs," the Swiss government said in a statement.

The amendments to Switzerland's existing legislation, to be prepared in consultation with the Swiss regulator, Switzerland's central bank, and the banks themselves, should be submitted by year-end, the government said.

The government's comments are in response to recommendations in December from a panel of experts which proposed that UBS and Credit Suisse should be subject to a higher leverage ratio, the broadest of capital requirements, but stopped short of laying out specifics for Switzerland's two largest banks. The leverage ratio is a measure of a bank's capital to its total assets.

Last week, UBS Chief Executive Sergio Ermotti said he expected Switzerland to hold off on formal proposals for leverage ratios until international regulators have weighed in, which is expected later this year or in 2016.

Tags

UBS, Credit Suisse, Switzerland, United States, Europe, leverage ratio

Copyright Thomson Reuters. All rights reserved.