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SNB urges progress from UBS, Credit Suisse on leverage ratios
[ZURICH] The Swiss National Bank (SNB) on Thursday urged the country's biggest banks, UBS and Credit Suisse, to further improve their leverage ratios in order to better withstand a potential crisis.
Switzerland is expected to hold off on outlining tougher capital requirements, known as leverage ratio targets, for its biggest banks until new international standards are outlined later this year. "The SNB recommends that the big banks do not lose momentum in their efforts to improve their resilience," the central bank wrote in its annual financial stability report. "This is particularly warranted with regard to the leverage ratio." When asked for comment a UBS spokesman said the bank is still analysing the report. A spokeswoman for Credit Suisse declined to comment on the report.
The financial stability report comes alongside the central bank's June monetary policy assessment. The SNB's rate decision is scheduled for 0730 GMT.
Switzerland will often gold-plate international requirements with a "Swiss finish" but the SNB said the country's biggest banks were not currently ahead of rivals when it came to the leverage ratio. "Swiss big banks' risk-weighted capital ratios are above the average for large globally active banks, the same cannot yet be said for their leverage ratios," the SNB wrote.
The central bank said Switzerland's biggest banks should prepare for the likelihood of increased capital requirements from domestic and international regulators.
The SNB also said big banks' loss potential relative to their capitalisation continued to be "substantial".
Solving the "too big to fail" problem has been a priority for regulators in the United States and Europe after several banks, including Zurich-based UBS, were bailed out in the 2007-2009 financial crisis.