Financial Regulatory Forum

Swiss regulator says UBS,CS face special regulation

September 30, 2009

finma-logo   ZURICH, Sept 30 (Reuters) – Switzerland’s two global banks UBS and Credit Suisse may face tighter regulation than other domestic and international competitors, the country’s banking regulator FINMA said in a strategy paper published on Wednesday.
   In the paper laying out FINMA’s strategic goals for 2010 through 2012, the regulator renewed its push for tougher rules on bank capital, liquidity, risk management, governance as well as its call for rules to unwind a large bank in times of crisis.
   Switzerland has lead the global drive for tougher regulation of banks in the wake of the financial crisis after the country had to rescue its largest bank UBS <UBSN.VX>. The Swiss have already added a tighter “Swiss Finish” to existing global rules.
   “The ability of the Swiss financial system, institutions of systemic importance and the financial centre infrastructure to weather crises needs to be increased without recourse to state aid,” FINMA said in the paper. 
   “The systemic importance and damage potential of large, complex institutions must be restricted to a level deemed economically and fiscally appropriate from a political perspective,” it said.
  The structure of “systemically relevant” institutions needed to reviewed so as to enable split-ups and partial sales even under difficult market conditions, it said:
   “In the case of insolvency, the separation and continued operation of functions of systemic importance should be striven for.”
   Switzerland has already introduced tougher capital requirements and proposed tighter regulation of bankers’ pay.
   But in recent weeks, UBS and Credit Suisse officials have warned that this may put the two banks at an international disadvantage.[ID:nLU62820]
   However, FINMA said the Swiss Finish may stay.
   “Institutions of systemic importance (too-big-to-fail) must comply with more stringent prudential requirements in order to strengthen their crisis resistance and support the preventive limitation of inherent risks,” FINMA said.
   But FINMA also pledged to fight for a level playing field internationally.
   “FINMA — in cooperation with the SNB and the Federal Department of Finance (FDF) — will work to strengthen international minimum standards on a sustainable basis and foster their consistent implementation within the international supervisory organisations,” it said.
   
   For the full release, click on: www.finma.ch/e/aktuell/Documents/strategische-ziele-finma-20090930-e.pdf
   (Reporting by Sven Egenter and Andy Bruce)
   ((sven-markus.egenter@thomsonreuters.com; +41.58.306.7351; Reuters Messaging: sven-markus.egenter.reuters.com@reuters.net))
 Keywords: SWISS BANKS/REGULATION
  
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 Wednesday, 30 September 2009 12:06:36RTRS [nLU218881] {EN}ENDS

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