The Swiss are stricter on the banks than us
The Financial Times front page (subscription) this morning features a blistering attack from Oswald Grubel, the chief executive of the giant Swiss bank UBS, on the British government for being too rough with the City of London.
“Only behind closed doors do they pay lip service to wanting to keep the City. If it is abandoned by the Government one day, God help you…If in one part of the world you have an 8 per cent capital requirement, and in another part of the world a 19 per cent…you don’t have to threaten, you know where the business is going.”
What’s rather played down, though, both by Mr Grubel and the FT report, is the fact that the Swiss government has imposed much more extensive capital requirements on its own large banks than the British authorities have on UK megabanks.
UBS and Credit Suisse will have to hold low-risk reserves equal to 10 per cent of their total risky assets, plus 9 per cent of their debt in convertible bonds (debt that converts to equity in crisis). This is considerably tougher than the Basel III capital requirements agreed last year by the world’s central banks and regulators, which only requires banks to hold 7 per cent of their risky assets in capital.
We sometimes hear from banking lobbyists and the sector’s sympathisers in the media that bankers will flee to places like Switzerland if we in Britain regulate them, or impose structural reform. But the fact is that, when it comes to capital, Switzerland has been stricter on the banks than us.Tagged in: banks, credit suisse, Oswald Grubel, UBS
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