Credit Suisse and UBS 'may have to double capital levels'

4 October 2010

UBS and Credit Suisse may have to dramatically increase their capital levels under proposals made by a government-appointed panel in Switzerland.

Under the plan, Switzerland's largest banks would be required to hold capital equal to 19 per cent of their assets, with a common equity ratio of ten per cent required by 2019.

This is tougher than the levels set out by the Basel Committee on Banking Supervision last month, with it proposing capital levels of 10.5 per cent and an equity ratio of seven per cent, reports Bloomberg.

Harris Dellas, a professor of macroeconomics and monetary policy at the University of Bern, said the plan was a good one for Switzerland.

"If the banks don't manage to raise the required extra capital, they will have to shrink without the government directly forcing them to," the expert explained.

Professor Dellas added that if UBS and Credit Suisse can meet the requirements, it will increase market confidence in them and allow them to remain "in the big league".

Last week, Carsten Kengeter became the new sole head of UBS's investment banking division after his previous co-head Alex Wilmot-Sitwell moved to a new position in the company's Asia Pacific operations.

By Gary Cooper

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