Swiss central bank urges lawmakers to approve bank reform

10th October 2010, Comments 0 comments

The Swiss central bank Sunday called on lawmakers to approve proposals to toughen capital standards on the country's biggest banks, UBS and Credit Suisse, far beyond planned international norms.

Proposals from government-appointed experts last week were "an important step", Swiss National Bank vice president Thomas Jordan told German language newspaper Sonntag.

"I warn (the lawmakers) against dividing the package up," he added, warning that tougher regulation of big banks represented an increasingly large "threat" for the Swiss economy, which is highly dependent on the sector.

Jordan said that the proposed tougher standards would in effect "defuse" the danger big banks potentially represented.

The experts' proposals would require the big banks to hold around 40 percent more common equity and around 80 percent more total capital than they would have to hold under new international regulations in the pipeline.

The commission estimated that the two big banks would be required to set aside a total of about 75 billion Swiss francs (56 billion euros, 78 billion dollars) each, or five percent of their balance sheet.

But it insisted that the economic benefits of the proposals, which would be phased in in the same timeframe as the so-called Basel III international regulations between 2013 and the end of 2018, would outweigh the costs.

© 2010 AFP

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