Swiss bank official defends new regulations

28th May 2011, Comments 0 comments

The vice president of the Swiss National Bank defended on Saturday tough new regulatory measures, saying they do not pose a threat to Swiss banks' competitiveness.

"The new regulations are not excessive," Thomas Jordan said in an interview with the Neu Zurcher Zeitung.

"I am convinced that the competitiveness of Swiss banks is not being threatened."

The Swiss government last month approved new rules for major banks, including a provision that allows regulators to adjust their salary systems or ban bonuses if they seek state aid.

Parliament will consider the new rules in the coming summer and autumn sittings. If approved, the regulations could come into force in early 2012.

Jordan said that banks must "make an effort" to apply the new rules, noting they could have to build up extra capital and review their organisations.

"But I also want to stress that if these conditions are applied, then the large Swiss banks will be outstanding international finance institutions and will set themselves apart from foreign competition."

In October 2010, a commission of experts advised the Swiss government to take tougher measures than imposed by Basel III international standards, which require banks to raise their high-quality core common equity to 7.0 percent of assets from the current 2.0 percent.

Swiss experts have called for a 10 percent level as well as an additional stock of convertible bonds, which could be turned into capital in case of difficulties.

The Federal Council wants to avoid a repetition of the situation which drove banking giant UBS close to collapse in 2008.

The institution had to be shored up by a multi-billion dollar state rescue package.

UBS recently said it feared negative repercussions for the Swiss finance sector as a result of the new regulations however.

© 2011 AFP

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