SNB's Jordan Says `Too Big to Fail' Still Not Solved: FuW
Further regulatory steps might be needed to allow big banks to fail without dragging down the economy, Swiss National Bank President Thomas Jordan said in a newspaper interview.
“The too-big-to-fail problem isn’t yet fully solved,” Jordan told Finanz und Wirtschaft in a written interview.
After UBS AG (UBSN), the country’s biggest bank, had to be bailed out by the government in 2008, Switzerland implemented capital standards that exceed the new Basel III rules. UBS and Credit Suisse Group AG (CSGN) need to hold at least 19 percent of their assets, weighted according to risk.
“What matters now is that banks implement the relevant requirements consistently and rapidly,” said Jordan, who previously headed the SNB’s regulation unit. “Whether additional measures will be needed depends primarily on whether the goal of an orderly winding down of major international banks is achieved.”
To improve their resilience, the SNB instructed UBS and Credit Suisse in June to improve their leverage rations.
“If the winding down isn’t possible, the buffers will have to be raised accordingly,” he also said, adding there were several possibilities, among them contingent-convertible bonds.
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