The requirement for 90 per cent to be backed by hard core capital, as decided by the Council of States, effectively doubles the requirement and thus goes well beyond international standards. This extreme and very costly regulatory approach is not practised in competing financial centres in Europe, the United Kingdom or the USA. It would tie up a large amount of additional own funds, which would not be available for financing businesses, investments and other productive purposes. This would considerably weaken the financial centre’s international competitiveness, without any proven additional benefit to financial stability. The consequences of such a unilateral approach would affect not only the financial centre, but also the wider economy and customers. The SBA deeply regrets that the predominantly critical comments from the business community and the cantons were not taken into account in the Council of States’ decision.
It is also disappointing that the Council of States did not endorse the proposal by the WAK-S on the further development and strengthening of AT1 instruments. This represents a missed opportunity to specifically strengthen an internationally established instrument capable of absorbing losses at an early stage of a crisis. This would have strengthened a bank’s ability to weather a crisis under its own steam, long before state support becomes necessary. Under today’s decision, AT1 instruments would not be taken into account when calculating the capital requirements for foreign shareholdings and would thus be massively devalued in Switzerland. This stands in clear contradiction to internationally established standards.
For the SBVg, it is also crucial to determine what lessons are to be learnt from the Credit Suisse crisis. The problem was not that capital requirements were too low, but rather the far- reaching exemptions from them that were granted to Credit Suisse for years. The logical lesson to be learnt from this would be to rule out such exemptions in future and to implement the existing rules consistently. Instead, a drastic tightening of capital requirements is being proposed.
A fundamental correction is therefore required for further political deliberations. This should build on the important groundwork laid by the EATC-S. What is needed is an approach that demonstrably contributes to financial stability, is compatible with international standards and safeguards the competitiveness of the Swiss financial center and the economy as a whole.
Roman Studer, CEO of the Swiss Bankers Association: “The Council of States’ decision undermines the competitiveness of the Swiss banking centre. Instead of learning the right lessons from the CS crisis, there are calls for a massive tightening of regulations without any proven gain in stability. Switzerland is going its own way, a path no other financial centre is taking. There is a risk that services will be cut and that we will lose talent as well as our leading international position.”