ZURICH, March 8 The only sure way for the Swiss
National Bank to cool the booming Swiss mortgage market is by
raising interest rates, the chief of Raiffeisen Switzerland said
on Saturday, adding that greater self-regulation by banks would
have little effect.
The Swiss government, at the request of the central bank, is
already forcing Swiss banks to maintain extra capital against
the mortgages they hold, after ultra-low interest rates
triggered a strong rise in real estate prices and mortgage
lending in Switzerland in recent years.
The Swiss National Bank (SNB) has said it is ready to
explore alternative measures to rein in the market if this
so-called countercyclical capital buffer does not work.
"Further measures or stricter self-regulation are pointless
in our view," Raiffeisen Switzerland's chief executive Pierin
Vincenz said in an interview with Swiss newspaper Finanz und
"The only measure the SNB can take that has been proven to
work is raising interest rates. The countercyclical capital
buffer is just a substitute measure," he said.
Yet the SNB cannot easily raise rates as this would clash
with its efforts to cap the Swiss franc. The central bank began
holding down the safe-haven unit in 2011 after investors fleeing
the euro zone crisis bid the currency up to record levels.
Vincenz, whose bank holds a 16 percent share of
Switzerland's mortgage market, said it was too early to judge
the success of the SNB's buffer, but in terms of equity capital,
the macroprudential measure would only affect a few banks.
"This is because the banks that are very active in the
mortgage business often have excess capital at their disposal,"
These considerations have led Raiffeisen to engage in talks
with Swiss financial regulator FINMA, Vincenz said.
(Reporting by Alice Baghdjian; Editing by Mark Trevelyan)