By Pierre Bertrand
The Swiss National Bank on Thursday stressed the need for new measures to be implemented after the crisis at Credit Suisse led to its acquisition by peer UBS, raising questions about the current regulatory framework.
The Swiss central bank said it is now calling on authorities to conduct an in-depth review, given the combined bank's heightened prominence and associated risks for Switzerland.
"Measures need to strengthen banks' resilience in order to prevent a loss of confidence wherever possible, and ensure a broad range of effective options to stabilise, recover or wind down a systematically important bank in the event of a crisis," the central bank said in its 2023 financial stability report.
The SNB added that the experience of Credit Suisse demonstrated a need for a review of the 'too big to fail' framework to facilitate early intervention in the event of a crisis.
Compliance with capital requirements is necessary, but isn't enough to keep confidence in a bank, it said, adding that features of Additional Tier bonds, designed to absorb early losses, have proved ineffective.
The SNB also said that the pace and scale of Credit Suisse's deposit outflows were more severe than assumed under current liquidity rules, and that banks in the future should be required to have a minimum amount of assets they could pledge to central banks in case of crisis.
"A thorough analysis will be conducted in the context of the legally required regular review of the [too big too fail] regulations. The implementation of the revised liquidity requirements will also play an important role in this respect," the central bank's report said.
Results of the analysis are expected within 12 months.
Write to Pierre Bertrand at pierre.bertrand@wsj.com
(END) Dow Jones Newswires
06-22-23 0501ET
