Swiss Regulator Says Orderly Exit of Big Banks ‘Unimaginable’

UBS AG (UBSN) and Credit Suisse Group AG (CSGN), Switzerland’s biggest banks, still can’t exit the market in an “orderly way,” according to the Swiss Financial Market Supervisory Authority.

“UBS and Credit Suisse still cannot exit the market in an orderly way, just as other globally active large banks,” according to the draft of a speech to be presented at a conference in Lucerne today by Patrick Raaflaub, director of the regulator known as Finma. “An orderly splitting up, a forced clean-up, and processing of a large bank is still unimaginable.”

Switzerland’s lower house approved a new law curbing risk- taking by the country’s biggest banks on Sept. 30. Swiss policy makers are running ahead of counterparts in the U.S. and Europe to make sure UBS and rival Credit Suisse cut risks and hoard capital to avert the type of banking collapse that hobbled Iceland’s economy.

“It is incredible that certain banks and their industry associations so strongly oppose the new, higher and internationally valid capital requirements following Basel III,” said Raaflaub. “Only with thick and qualitatively high reserve ‘cushions’ can the entire system be made more stable and in the long term more successful.”

To contact the reporter on this story: Carolyn Bandel in Zurich at cbandel@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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