S&P warns that property bubble threatens small Swiss banks

The international ratings agency Standard & Poor’s lowered Tuesday its outlook on nine smaller regional Swiss banks owing to what it says might be a growing real-estate bubble.

S&P affirmed its ratings on the banks but warned that “the residential real estate price increases we have observed in Switzerland over the past three years represent a risk for those Swiss banks that have mainly domestic operations.”

The ratings agency confirmed its assessment of Swiss giants UPS and Credit Suisse owing to their global presence.

“Domestic-oriented Swiss banks have significant residential real estate loan exposures, the possibility of a continued increase in house prices is likely to lead to increased risks of a correction and higher loan losses,” S&P stressed.