October 4, 2010
Swiss government-appointed experts said Monday that tougher capital standards should be imposed on Switzerland's two biggest banks, UBS and Credit Suisse, that far exceed new international "Basel III" proposals.
The commission of financial experts recommended in a report that the capital ratio for the two banks should amount to 19 percent of risk-weighted assets, including 10 percent in high- quality common equity .
"Compared with the minimum requirements of Basel III, the Commission's proposals require the big banks to hold around 40 percent more common equity and around 80 percent more total capital," the commission said in a statement.
The Swiss central bank and the regulator, the Financial Markets Authority (FINMA) welcomed the proposals and said they should be implemented swiftly.
"The Swiss National Bank and FINMA regard it as absolutely essential that the committee?s proposals are implemented in their entirety," they said in a statement.
Credit Suisse and UBS are regarded as "too big too fail" because of their size and influence on the Swiss economy.
UBS, then the biggest of the two, had to be shored up during the financial crisis by a multibillion dollar state rescue package.
The Basel III plans drawn up by central banks and regulators in the wake of the collapse of banks during the financial crisis will be submitted to the Group of 20 (G20) summit of major industrialised and developing nations in South Korea in November.
Under those international proposals, requirements for banks' top quality Tier One capital cover will rise to the equivalent of seven percent of their risk assets from the current two percent.
This story was found at: http://news.theage.com.au/breaking-news-world/swiss-banks-must-face-tougher-capital-standards-20101004-1643v.html
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