Swiss move ahead with tightening capital rules for biggest banks

UBS is one of the banks that will have to set aside additional capital to comply with new regulations. (File photo: Reuters)

Switzerland is set to move ahead with rules that will revise the amount of money which its biggest banks will need to set aside in case of a crisis. UBS Group and Credit Suisse are expected to set aside an additional 24 billion francs ($24.03 billion) in reserves to comply with the new rules, Bloomberg reported citing officials.

The new rules will come into effect from January 1, 2020, and banks will have five years to comply with the new regulations, according to a spokeswoman for the Swiss State Secretariat for International Finance.

“In line with international Financial Stability Board (FSB) standards, the amendments to the Capital Adequacy Ordinance adopted are intended to ensure that sufficient gone-concern capital is available in the event of a crisis, particularly in the parent banks and in the Swiss units that perform systemically important functions,” the State Secretariat for International Financial Matters said in an emailed statement.

A UBS spokesman says that the bank had taken note of the development, Bloomberg previously reported earlier, while Credit Suisse said that the additional requirement came “as no surprise,” and had already been taken into account in the bank’s capital planning.

The changes in regulation were announced earlier this year as Swiss authorities reportedly worry that another financial crisis could cause difficulties with large parts of the banks’ capital reserved for foreign locations leaving Switzerland lacking capital, local media reported when the plans were unveiled.

The Swiss Federal Department of Finance added that it would also simplify the rules for calculating capital requirements in order to “ease the burden on small, particularly liquid, well-capitalized banks and securities firms.”

Last Update: 07:01 KSA 10:01 - GMT 07:01