Swiss regulators are set to keep the lead on stricter bank regulation despite growing competition concerns among bankers, thanks to strong political support for tighter reins on UBS(UBSN.VX) and Credit Suisse(CSGN.VX). Switzerland has led the global campaign for tougher rules, starting to draw up stricter capital requirements as early as spring 2008, even before it had to bail out its flagship bank UBS in the wake of the Lehman Brothers collapse in autumn 2008. Following are some key facts about new Swiss rules, proposals discussed and issues going forward:
CAPITAL REQUIREMENTS
Swiss regulator FINMA requires UBS and Credit Suisse to have a capital ratio in good times of 16 percent of risk weighted assets -- a 100 percent top-up to international minimum standards set by the current Basel II agreement.
The capital ratio may fall to 12 percent capital in tough times before FINMA will call on the banks to take action.
Both banks have until 2013 to comply though both are already above the minimum and especially Credit Suisse is one of the best capitalised banks in the world.
FINMA also introduced a leverage ratio, curbing banks' ability to grow through incurring debt. The banks must meet a minimum of 3 percent on a group level and 4 percent on a bank level. The leverage ratio has to be higher in good times.
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