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Swiss to adopt tougher trading book rules in Jan

Published 11/10/2010, 05:55 AM
Updated 11/10/2010, 06:00 AM

* Implementation of Basel norm a year ahead of global peers

* Gov't revises ordinance as requested by Swiss regulator

ZURICH, Nov 10 (Reuters) - Switzerland tightened its banking regulations on Wednesday, obliging the country's lenders to meet strict new standards a year ahead of their global peers on the capital they must hold to cover risks from trading operations.

The Swiss cabinet said in a statement the new rules would come into force on Jan 1, 2011.

Switzerland led a global push for tougher regulations after the government had to bail out the country's largest bank, UBS, at the height of the financial crisis.

"The ... crisis made it quite clear that the risks of loss attached to trading activity and securitisation were underpinned by insufficient capital levels," the cabinet said.

It said it had revised the country's Capital Adequacy Ordinance, as requested by Swiss regulators in July

The country is adopting regulations drawn up by the Basel Committee of central bankers and supervisors, as well as European Union standards on the risks banks incur in the interbank market. After intense lobbying, the Committee agreed to delay implementation of the requirements.

U.S. Treasury Secretary Timothy Geithner and European Union financial markets chief Michel Barnier agreed last month on a December 2011 implementation date for the new trading book rules.

"The stricter regulations envisaged will affect the big banks to the same degree as their international competitors. They will also hit the other banks to varying degrees," the Swiss government said.

Switzerland has already introduced higher capital requirements, a leverage ratio, a stricter liquidity regime and new rules for bankers' pay.

Last month, it announced even tougher rules for UBS and Credit Suisse, telling them to hold more capital than international rivals to prevent a bank failure crippling the country.

For full statement, click here: http://www.efd.admin.ch/aktuell/medieninformation/00462/index.html?lang=en&msg-id=36164

(Reporting by Emma Thomasson; Editing by John Stonestreet)

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