UBS and Credit Suisse poised for tighter regulation
Swiss regulator out with proposals for tighter regulation of global banks
From January 1, 2013, the two banks will have to hold increased capital buffers above the Basel II minimum requirements - they will need to meet a minimum ratio (capital as a percentage of risk-weighted assets) of 12%, which could rise to 16% in good times - defined as a period of two years of profits at the average level.
UBS and Credit Suisse will also have to hold capital as a percentage of (unweighted) assets of at least 3% at group level and 4% at bank level - higher in good times. This leverage ratio excludes domestic lending (except interbank) and selected assets used in central bank repos.
Finma has also published proposals for rules on bankers' pay, which are now out for comment. Under the proposal, all Swiss banks would have to ensure high risk incurred by employees results in lower variable remuneration than low risk. Bonuses should also only be paid when the group is profitable and all award criteria should be long-term oriented.
The regulators have also issued new guidelines for liquidity requirements and stress testing. In common with the EU and the US, the SNB is pushing for an international framework to allow a co-ordinated unwinding of a failed bank to address the 'too big to fail' problem of systemically relevant institutions. Another option being looked at is limiting the size of banks either by defining direct limits or by setting indirect incentives such as higher capital requirements to keep the size down.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Risk management
Op risk data: FIS pays the price for Worldpay synergy slip-up
Also: Liberty Mutual rings up record age bias case; Nationwide’s fraud failings. Data by ORX News
Banks hold 73% of liquidity buffer in cash and Level 1 assets, on average
Largest lenders hold highest share of central bank reserves in buffer, latest analysis shows
EBA supports global op risk taxonomy, but it won’t happen soon
New EU framework designed to ease adoption by banks; other jurisdictions have different priorities
Allocating financing costs: centralised vs decentralised treasury
Centralisation can boost efficiency when coupled with an effective pricing and attribution framework
EVE and NII dominate IRRBB limit-setting
ALM Benchmarking study finds majority of banks relying on hard risk limits, and a minority supplementing with early-warning indicators
Banks split over AI risk management
Model teams hold the reins, but some argue AI is an enterprise risk
Collateral velocity is disappearing behind a digital curtain
Dealers may welcome digital-era rewiring to free up collateral movement, but tokenisation will obscure metrics
New EBA taxonomy could help integrate emerging op risks
Extra loss flags will allow banks to track transversal risks like geopolitics and AI, say experts