Swiss committee of experts urge higher capital requirements
05 October 2010
The Commission of Experts appointed by the Federal Council in Switzerland has submitted a package of measures for the limitation of "too big to fail" risks posed by banks that are systemically important to the Swiss economy.
At the heart of this is increased capital requirements: consisting of "8% total capital, of which at least 4.5% must be held in the form of common equity, i.e. top-quality capital, and 6% in the form of Tier 1 capital. In accordance with the eligibility criteria, CoCos may be included in these minimum requirements." The proposed calibration would be 19% total capital, i.e. including buffers and convertible bonds of which 10% has to be common equity. In terms of liquidity requirements the FINMA and the SNB will continue to monitor the work of the Basel Committee closely in order to establish whether the adoption of the international standards will necessitate any amendments to the Swiss liquidity standards.
