The 90 percent capital requirement with hard core capital decided by the Council of States leads to a doubling of the requirement, thereby significantly exceeding international standards. This extreme and very costly regulatory approach is not practised in competing financial centres in Europe, the United Kingdom, or the United States. It would bind additional capital on a large scale that would not be available for funding companies, investments, and other productive purposes. This would severely weaken the international competitiveness of the financial centre without demonstrating any added benefit to financial stability.
The consequences of such a deviation would impact not only the financial hub, but also the industrial sector and clients. The SBA greatly regrets that the predominantly critical feedback from the business community and the cantons was not considered in the decision of the Council of States.
It is also disappointing that the Council of States did not follow the EATC's proposal to further develop and strengthen AT1 instruments. A significant opportunity was missed to specifically strengthen an internationally established instrument that can absorb losses at an early stage of a crisis. This would have strengthened a bank's ability to manage a crisis on its own long before government support becomes necessary. With today's decision, AT1 instruments would not be considered when setting capital requirements for foreign investments and thus massively devalued in Switzerland. This stands in clear contradiction to internationally established standards.
For the SBA, it also remains crucial which lessons are drawn from the Credit Suisse crisis. The problem was not too low capital requirements, but the extensive exceptions allowed to Credit Suisse over many years. The logical lesson would be to rule out such exceptions in the future and to consistently implement the existing rules. Instead, an extreme tightening of capital requirements is being proposed.
A fundamental correction is therefore needed for the further political consultations. These should build on the important preliminary work of the EATC. An approach is required that demonstrably contributes to financial stability, is internationally compatible, and maintains the competitiveness of the Swiss financial hub and the overall economy.
Roman Studer, CEO of the Swiss Bankers Association: "The decision of the Council of States weakens the competitiveness of the Swiss banking hub. Instead of drawing the right lessons from the CS crisis, a massive tightening without proven stability gain is being demanded. Switzerland is taking a divergent path that no other financial centre is following. There is a risk of losing services, talent and our leading international position."