SFBC aims to raise capital requirements

Sustained subprime writedowns cause Swiss regulator to call for tougher banking rules

BERNE – Following another announcement from UBS of further writedowns relating to the subprime crisis, the Swiss banking regulator, the Swiss Federal Banking Commission (also known by its German initials EBK), has stated that it intends to increase capital reserve requirements for investment banks once the industry has recovered from its ongoing turmoil.

At an annual news conference, Daniel Zuberbuehler, head of the SFBC, said: “We will pursue this goal as soon as the banks have overcome this crisis and have rediscovered their old levels of profitability.”

The Swiss regulator already requires its banks to hold 20% more safety capital than required under the minimum standards set out in the Basel Accord. However, it will not force investment banks to adhere to tougher standards immediately, fearing this could deepen problems for Swiss banks. But Zuberbuehler says banks should maintain their capital levels above the minimum requirements and, for now, to refrain from share buybacks.