Switzerland sets out tougher liquidity rules for key banks

Switzerland's Federal Council has adjusted liquidity rules for locally systemically important banks.

Affected banks must now hold enough liquidity to withstand a 90-day crisis, as opposed to 30 days previously. The Swiss Financial Market Supervisory Authority, or FINMA, also has the power to impose company-specific surcharges.

Switzerland's five systemically important banks are UBS Group AG, Credit Suisse Group AG, Raiffeisen Gruppe Switzerland, PostFinance AG and Zürcher Kantonalbank. UBS and Credit Suisse are also considered globally systemically important.

"The current requirements in the Liquidity Ordinance did not result in systemically important banks holding an appropriate and consistently higher level of liquidity. The requirements were therefore comprehensively revised and increased," the Federal Council said June 3.

To meet the higher requirements, certain measures can be counted up to an upper limit. Banks can sell marketable securities that they can use to generate liquidity during a crisis, according to the council. The new rules take effect July 1, and banks have 18 months to comply.

UBS is aware of the new ordinance, a spokesperson told S&P Global Market Intelligence via email. Credit Suisse acknowledged the changes, a spokesperson said. UBS and Credit Suisse's liquidity coverage ratios stood at 160% and 196%, respectively, at the end of March.

Zürcher Kantonalbank's average liquidity coverage ratio was 155% at March-end, said a spokesperson, noting that the bank "already fulfills in principle the new requirements."

Raiffeisen has "taken note" of the change and intends to meet the new requirements in time, a spokesperson told S&P Global Market Intelligence via email. PostFinance was well-placed to meet the new requirements, a spokesperson said, adding that operational provisions were underway meet the threshold.