UBS and Credit Suisse poised for tighter regulation
Swiss regulator out with proposals for tighter regulation of global banks
From January 1, 2013, the two banks will have to hold increased capital buffers above the Basel II minimum requirements - they will need to meet a minimum ratio (capital as a percentage of risk-weighted assets) of 12%, which could rise to 16% in good times - defined as a period of two years of profits at the average level.
UBS and Credit Suisse will also have to hold capital as a percentage of (unweighted) assets of at least 3% at group level and 4% at bank level - higher in good times. This leverage ratio excludes domestic lending (except interbank) and selected assets used in central bank repos.
Finma has also published proposals for rules on bankers' pay, which are now out for comment. Under the proposal, all Swiss banks would have to ensure high risk incurred by employees results in lower variable remuneration than low risk. Bonuses should also only be paid when the group is profitable and all award criteria should be long-term oriented.
The regulators have also issued new guidelines for liquidity requirements and stress testing. In common with the EU and the US, the SNB is pushing for an international framework to allow a co-ordinated unwinding of a failed bank to address the 'too big to fail' problem of systemically relevant institutions. Another option being looked at is limiting the size of banks either by defining direct limits or by setting indirect incentives such as higher capital requirements to keep the size down.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Risk management
JSCC considers default fund consolidation
Japanese clearing house looks for efficiency gains amid expansion of clearing products and influx of international firms
EU clearing houses pressured to diversify cloud vendors
CROs and regulators see tech concentration risk as a barrier to operational resilience
Why better climate data doesn’t always mean better decision-making
Risk Benchmarking research finds model and systems integration challenges almost as limiting to effective climate risk management
CanDeal looks to simplify third-party risk management
Six-bank vendor due diligence utility seeks international reach
Market players warn against European repo clearing mandate
Regulators urged to await outcome of US mandate and be wary of risks to government bond liquidity
Italy’s spread problem is not (always) a credit story
Occasional doubts over Italy’s role in the monetary union adds political risk premium, argues economist
Esma won’t soften regulatory expectations for cloud and AI
CCP supervisory chair signals heightened scrutiny of third-party risk and operational resilience
AI spend in US could be good for bonds in Europe – finance chiefs
Development of AI is capital-intensive, but adoption less so, which could favour EU