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Swiss banks subject to US-style stress test

Switzerland's banking authority has created a "stress test" similar to one used in the United States to see how banks here would weather another crisis.

In a report published on Sunday in the NZZ am Sonntag newspaper, the Swiss Financial Market Supervisor Authority (Finma) said the test looked at what would happen if a bank suddenly had four per cent of its credits turn sour.

The paper estimated Swiss banks would need reserves of SFr50 billion ($46 billion) to withstand the hit.

Finma spokesman Alain Bichsel said such check ups also looked at how deposits were being converted into loans.

Bankers expect the test could be used to help Finma levy stricter capital requirements on the country’s financial institutions. with agencies

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR

SWI - a branch of Swiss Broadcasting Corporation SRG SSR