Swiss Banking Reforms Raise Overcorrection Risk After Credit Suisse Collapse

Giorgio Pradelli has raised concerns that Switzerland’s regulatory response to the Credit Suisse collapse could go too far.

Speaking to the Financial Times as chief executive of EFG International, Pradelli said Switzerland should consider how tougher rules could affect banks competing in overseas markets.

Pradelli will become chair of the Swiss Bankers Association on 17 September while continuing to lead the Zurich-based private bank.

Switzerland is consulting on broader reforms intended to address weaknesses exposed by the Credit Suisse crisis.

The measures include stronger crisis planning, greater enforcement powers for financial regulator Finma and improved access to central bank liquidity.

They would also make senior managers more accountable and introduce bonus clawbacks at systemically important banks in cases of misconduct.

UBS Faces US$20 Billion Capital Increase

UBS faces a separate debate over tougher capital requirements.

The government’s proposal could require the bank to hold about US$20 billion more in Common Equity Tier 1 capital against its foreign subsidiaries.

Lawmakers are considering alternatives that could reduce the requirement.

The measures form part of Switzerland’s response to UBS’s government-brokered takeover of Credit Suisse in 2023.

Pradelli viewed the proposed framework as broadly measured but said policymakers needed to pay greater attention to its effect on Switzerland’s competitiveness.

Featured image: Edited by Fintech NewsSwitzerland, based on image by kavalenkava via Magnific

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