Swiss National Bank Tells UBS and Credit Suisse to Bulk Up
June 16 2016 - 10:00AM
Dow Jones News
ZURICH—Switzerland's central bank said on Thursday that the
country's two biggest lenders, UBS Group AG and Credit Suisse Group
AG, need to bolster their respective layers of protective
capital.
The Swiss National Bank said in its annual Financial Stability
Report that while both big banks have met current "too big to fail"
requirements designed to protect the Swiss economy in the case of a
large bank failure, UBS and Credit Suisse have work to do to meet
recently revised rules that go into effect in 2020.
To meet requirements for leverage ratios, or capital held
relative to assets and investments, UBS and Credit Suisse each need
additional going-concern capital—which can absorb losses under
normal operating conditions—of roughly 10 billion Swiss francs
($10.4 billion), the SNB said. It added that the banks could cover
"the bulk" of this requirement by issuing so-called contingent
convertible debt, designed to turn into equity if a bank's capital
levels fall beneath a designated level.
To meet so-called gone-concern requirements, or rules for being
able to recapitalize in case of insolvency, UBS and Credit Suisse
each must issue loss-absorbing instruments worth between 20 billion
and 25 billion francs, the SNB said.
Both banks "need to take action," the SNB said.
A UBS spokesman said in a statement that while bank disagrees
"with a number of depictions" in the report, it "does not point out
anything materially new." UBS laid out its plans to meet revised
stability rules during its last quarterly results presentation.
A Credit Suisse spokeswoman didn't immediately respond to a
request for comment.
Write to John Letzing at john.letzing@wsj.com
(END) Dow Jones Newswires
June 16, 2016 10:45 ET (14:45 GMT)
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