Credit Suisse chairman defends one bank model: paper

ZURICH (Reuters) - Swiss bank Credit Suisse (CSGN.VX) will not withdraw from investment banking despite the losses caused by the credit crisis, the bank's chairman said in an interview published on Saturday.

In the interview with the newspaper Basler Zeitung, Credit Suisse chairman Walter Kielholz also warned that tough new regulations in Switzerland for the two big banks might endanger their competitiveness and turn them into takeover candidates.

"The economic outlook for the coming three to five years and the expected investment risks for this time certainly suggest that we will take a conservative approach when providing our investment bank with capital," Kielholz said according to an online version of the newspaper.

Calls for the bank to focus on private banking alone were wrong as private banking clients wanted a broad range of services, Kielholz said. "That includes the investment bank."

Credit Suisse has so far written down some $9 billion in credit-related assets, far less than its Swiss-based rival UBS (UBSN.VX), Europe's hardest-hit victim of the credit crisis which has a similar business model.

Kielholz criticized plans from Swiss regulators to impose stricter requirements on the two major Swiss banks.

The suggested leverage ratio or debt limits were not suitable instruments as they did not take into account the heterogeny of risks on the balance sheets, he said.

"If you use this system for highly complex financial groups it gets so confused that it looks just insufficient compared to the relatively well-thought through rules of Basel II," he said.

The head of the Swiss banking watchdog EBK laid out plans to introduce a leverage ratio and extra capital buffer for losses in a Reuters interview on July 1 and said they were now discussed with the banks. (For the interview double click on ID:nL01424845)

Kielholz criticized the fact that much of the regulators' plans was discussed publicly in advance.

"It irritates me if representatives of the watchdog create the impression that they do not care about the competitiveness of Switzerland as a financial centre," he said.

"If this were the case, the two big banks would be virtually offered for sale," Kielholz said.

The Credit Suisse chairman said the idea that rival UBS could be taken over was troubling. "The financial centre Switzerland needs two internationally successful banks to play a role in the international top league," he said.

(Reporting by Sven Egenter, editing by Mike Peacock)