UBS, Credit Suisse Face Tough New Capital Rules

A Swiss government panel proposed rules that would require the nation’s two big banks, UBS and Credit Suisse, to hold more capital in reserve than international competitors as a way to provide extra insurance against a catastrophic failure.

The rules, which require approval by the Swiss parliament, address concerns by the Swiss National Bank and others that a severe crisis at Credit Suisse or UBS could prove more than the nation of 7.8 million people could bear. The two banks’ combined balance sheets are five times the size of the Swiss economy.

“Given their size, it cannot be ruled out that the big Swiss banks are potentially T.B.T.B.R.,” or too big to be rescued, the Commission of Experts said in a report. The commission, which was appointed by the Swiss Federal Council, included representatives of the central bank as well as industry and the two big banks.

Please read more in the Wall Street Journal.