Stiffer banking rules set to win backing

Parliament has agreed in principle to a series of measures aimed at bolstering the capital basis of Switzerland’s main banks.

The House of Representatives on Thursday approved a proposal for a total equity ratio of at least 19 per cent and tougher liquidity requirements.

Discussions on improved risk diversification and steps to ensure the payment of transactions in case of a bank’s insolvency will continue next week.

During the debate the rightwing Swiss People’s Party warned that the banks risked losing their competitive edge as the proposed regulations were too stringent.

The centre-left Social Democrats and the Greens for their part argued the amendments did not go far enough to prevent a renewed state intervention with taxpayers’ money to save hazardous banks.

The Senate approved most of the measures in June. The government hopes the new regulations, which are above the minimum standards set by international regulators, will come into force next year.

In 2008 the government had to bail out the leading UBS bank with a multi-million financial package in the wake of the global financial crisis. The bank’s total assets were 2.5 times higher than Switzerland’s Gross National Product.