Switzerland's central bank on Thursday told the two big Swiss banks, UBS and Credit Suisse, they still need to draft credible plans for a potential insolvency, as part of the country's efforts to prepare for a banking crisis.
Reuters reports that after the financial crisis in which UBS suffered billions of dollars in losses and took a government bailout, Switzerland introduced new regulations designed to protect the economy from a possible banking collapse.
The Swiss National Bank (SNB), which helps oversee the stability of Switzerland's financial system, said the two big banks are on track to meet the new capital requirements but more work was needed in planning for a potential bankruptcy.
"In view of the significance of resolution as a means of resolving the 'too big to fail' issue in Switzerland, it is essential that further progress be made in drawing up robust resolution plans," the SNB wrote in its annual financial stability report.
The two big banks, whose combined balance sheets are more than two-and-a-half times the size of Switzerland's economy, have already set up Swiss subsidiaries that house the functions crucial to Switzerland.
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