Switzerland should adopt stricter capital requirements for UBS and Credit Suisse following the introduction of tighter rules in the U.S. and the U.K., a government-appointed panel recommended, concluding a yearlong review of measures to avoid bailouts.
“Switzerland should be among the countries with the highest standards internationally” for big banks, the panel said in a report published last week, adding that this applies to both of two key measures of financial soundness. “The Swiss lead with regard to risk-weighted requirements is small and the country is somewhat behind the U.S. and the U.K. in the area of leverage ratio.”
Bloomberg News reports that Switzerland was one of the first countries to introduce stricter rules after the 2008 financial crisis, when the government spent $6.2bn to bail out UBS. Since then, other countries have caught up and some have exceeded the Swiss requirements. The rules, some of which are still being phased in, are meant to prevent the failure of a large bank from posing a threat to the wider economy. With $1.07tril in assets, UBS is about 1.7 times the size of Switzerland’s gross domestic product.
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