Zuercher Kantonalbank said the canton of Zurich needs to inject 2 billion Swiss francs ($2.2 billion) into Switzerland’s biggest publicly owned lender after stricter rules depleted capital.
Boosting so-called endowment capital to 4.5 billion francs would plug a potential funding gap after ZKB complied with a Swiss goal to hold capital equal to 13.6 percent of risk-weighted assets from July 1, 2011, the Zurich-based bank said today in a statement. The previous target was 9.6 percent, while the endowment capital level hasn’t changed since 1994, ZKB said.
“Because of the sharpened guidelines the formerly available capital excess of 2.4 billion francs was almost entirely regulated away overnight,” Joerg Mueller-Ganz, chairman of ZKB’s supervisory board, told reporters in Zurich.
The Swiss Financial Market Supervisory Authority, or Finma, introduced tougher regulations to align capital buffers with the size of bank balance sheets and assets under management. ZKB, which is one of at least 11 Swiss financial institutions being investigated on suspicion of helping Americans hide money from the Internal Revenue Service, said the request for additional capital isn’t related to the U.S. probe.
Switzerland has been in negotiations with the U.S. to resolve the probe and find a solution on treatment of undeclared bank accounts for almost two years. ZKB has exited business with American clients, the bank said last month.
ZKB said it wants cantonal bank law revised so that the lender can open branches outside Zurich and “react” to consolidation in the Swiss banking industry.