Swiss banks to see tough rules
Swiss legislators have moved to drastically toughen capital requirements on big banks Credit Suisse and UBS amid concerns their failure in a crisis could drag down the Alpine country's economy.
Lawmakers in the upper chamber of parliament, the Council of States, approved the measures expected to cost each bank $90 billion in a preliminary vote late on Tuesday and were due to cast a final vote on Thursday.
The measures would require the banks to hike their high-quality core common equity to 10 percent of assets plus hold another nine percent in bonds that could be converted into equity if needed.
The measures are considerably tougher than the Basel III international standards under which banks are to raise their high-quality core common equity to 7.0 percent of assets from the current 2.0 percent.
UBS has criticised the measures which it says will put it at a competitive disadvantage.
Credit Suisse meanwhile has voiced support for the regulations, with its chief executive Brady Dougan declaring that the bank is an "early adopter" of more stringent rules.
In February, the bank raised $6 billion by issuing convertible bonds to Qatar Holding and Saudi Arabia's Olayan Group, in order to get ahead with meeting the new capital requirements.
"The capital requirements are strict but will be achievable for the bank," a Credit Suisse spokesman said on Wednesday.
The lower house of parliament will not take up the government-proposed bill until after the summer break, according to a spokesman.
The measures were proposed by experts last year after a government rescue of UBS during the 2008 financial crisis.
Last year a commission of experts advised the government to adopt measures tougher than the Basel III standards as Credit Suisse and UBS are regarded as "too big too fail" because of their size and influence on the Swiss economy.
Beyond tougher capital rules, the government also wants oversight on the remuneration policies of large banks that have to be bailed out using federal funds.