SNB calls for improved banking capital rules in Switzerland

The Swiss National Bank (SNB) has called attention to weaknesses in the capital rules for Swiss banks after the 2023 collapse of Credit Suisse. The central bank supports the government's efforts to strengthen the banking industry. Following Credit Suisse's failure, which was taken over by UBS, Switzerland plans to implement stricter banking regulations. These new rules mainly focus on ensuring that UBS holds more capital to avoid similar issues in the future. However, there is ongoing debate about how much capital UBS should maintain, particularly concerning its foreign branches. In its annual report, the SNB noted its concerns about UBS's capital support for its subsidiaries. It mentioned that while UBS's main bank is financially stronger than Credit Suisse was before its crisis, improvements are still needed in the overall capital framework. UBS claims it is already well-capitalized compared to other global banks. They warn that requiring them to hold more capital could harm their competitiveness and threaten Switzerland's status as a key financial center. The SNB has observed positive signs in the integration of Credit Suisse into UBS. Market indicators, such as stock prices and credit default swaps, suggest that investors are optimistic about the future of the merged bank. The SNB also highlighted ongoing risks in the mortgage and real estate markets.