ZURICH (Reuters) – Weaknesses in Switzerland’s financial regulatory system remain following the collapse of Credit Suisse in 2023 and must be addressed, the Swiss National Bank said on Thursday.
As part of a government-backed rescue operation, Credit Suisse was taken over by its longtime rival UBS in 2023. Concerns that the expanded lender posed risks to the economy prompted the government in April to propose tougher rules for banks deemed “too big to fail.”
At the heart of the plan were proposals for UBS to hold more capital, but they still face a lengthy political process.
In its annual financial stability report, the SNB said it shared the views of the Federal Council Governor on the need for action on capital requirements, liquidity requirements, early intervention, and recovery and resolution planning.
“The current capitalization of the combined parent bank UBS is higher than the capitalization of the parent bank Credit Suisse before the crisis. However, shortcomings of the current regime remain and need to be addressed,” the central bank said.
The SNB also backed a review of its liquidity coverage ratio, a key indicator for assessing a bank’s ability to meet its cash flow needs, after the outflow of retail deposits during the Credit Suisse crisis was larger and faster than expected.
Switzerland’s financial regulator said Wednesday that UBS’s takeover of Credit Suisse did not raise any competition concerns, despite recommendations from the country’s competition watchdog that it merited further scrutiny.