Go Finance Reporting in GENEVA - Swiss National Bank Vice President Thomas Jordan poured a new rule that is claimed to not pose a threat to the competitiveness of banks in Switzerland.
As quoted by the AFP on Sunday (05/29/2011), Jordan said that if the new rule is not too excessive. Where it believes the Swiss bank's competitiveness will not be threatened.
The Swiss government last month approved new rules for large banks, including the provision that allows regulators to adjust salaries or bonuses, as well as a ban if they seek help from the state.
Parliament also said it would consider new rules next summer and in autumn. If approved, these regulations come into force in early 2012.
Jordan said that the bank should "try" to apply these new rules and they should be able to build additional capital and reviewing their organization.
"But I also want to emphasize that if these conditions applied, then the major banks in Switzerland will be circulated in the international financial institutions and will set themselves apart from foreign competition," he added.
For information, in October 2010, the expert commission suggested the Swiss government to take tougher action than what is imposed by international standards of Basel III, which requires banks to increase their common equity to 7.0 percent of assets from 2.0 percent today.
They called for an interest rate of 10 percent and additional shares of convertible bonds, which can turn into capital in case of trouble.
Federal Council itself wanted to avoid a repetition of the situation that encourages banking giant UBS which collapsed in 2008. These institutions must be supported by a package of multi-billion dollar state bailout. But UBS recently said that worries about negative impact on the financial sector in Switzerland as a result of new regulations. (GoFinance)
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