UPDATE: UBS, Credit Suisse Face "Swiss Finish" Of Basel Reforms
13 9월 2010 - 7:28PM
Dow Jones News
The Swiss government said Monday that a final report on how to
insulate Switzerland's finance sector from a collapse of one or
both major banks UBS AG (UBS) and Credit Suisse Group (CS) is
expected by the end of the month, adding a "Swiss finish" to
tougher capital measured agreed by international regulators this
weekend in Basel.
A Swiss commission of experts preparing recommendations for the
government last month postponed the publishing date of its final
report by roughly one month in order to take into account
international bank capital requirements, which were agreed
Sunday.
While the Swiss banks are lauded by experts for their strong
capitalization compared with rivals in Europe and further afield,
UBS and Credit Suisse face tougher requirements than many rivals as
a result of the too-big-to-fail measures.
Analysts said that while the reforms agreed in Basel aren't as
harsh as expected, the Swiss regulator typically requires a "Swiss
finish," meaning the international rules are translated more
forcefully in Switzerland than elsewhere. Monday, a spokesman for
regulator Finma declined comment.
Last week, Swiss National Bank president Philipp Hildebrand
reinforced his calls for swift, effective legislative measures to
mitigate risks from UBS or Credit Suisse failing, during budget
hearings before a parliamentary commission. The two banks,
repeatedly termed too big to fail by the SNB, are a key concern to
the central bank because they make for such a large portion of
Switzerland's finance industry, which in turn makes for a sizable
portion of gross domestic product.
The expert body, which includes representatives from the SNB,
the regulator Finma as well as UBS and Credit Suisse, already
proposed initial measures this spring, including more capital. The
final report is expected to be submitted to the government at the
end of this month, a finance department spokesman said.
Specific capital measures the commission is backing are
so-called contingent convertible--or Coco--bonds, which can convert
into shareholders' equity in the event of a bank crisis. Banks must
also hold enough liquidity to withstand an unspecified period of
crisis without outside help, the commission said in April.
The measures are expected to crimp shareholder payouts, because
the banks will hold back profits in favor of bolstering capital
ratios. A spokesman for Credit Suisse declined to comment, while
UBS wasn't immediately available for comment on the planned
too-big-to-fail measures.
The specter of a major Swiss bank failure akin to the September
2008 collapse of Lehman Brothers was brought into sharper focus by
the 2008 shore-up of UBS, which received government aid after
writing down more than $50 billion in mortgage-related securities.
The bank has since righted itself, posting several quarters of
profit in a row and nearly stanching outflows of wealthy client
funds.
By contrast, Credit Suisse didn't take government aid in 2008,
but did replenish its capital privately to meet a first wave of
capital rules put in place by the Swiss regulator as a response to
the financial crisis.
-By Katharina Bart, Dow Jones Newswires; +41 43 443 8043;
katharina.bart@dowjones.com