* Swiss govt to stick to plans for capital rules
* Big banks will likely need Tier 1 capital of 10 pct
* Swiss hold national elections on Oct. 23
By Catherine Bosley
ZURICH, April 20 The Swiss government looks set
to push ahead with plans to make UBS UBSN.VX (UBS.N) and
Credit Suisse CSGN.VX (CS.N) reach tough new capital standards
despite warnings they could make the banks uncompetitive.
The Swiss cabinet, which operates on the basis of consensus
and has already put out a draft law, is expected to announce its
formal recommendation to parliament at a press conference on
The government is likely to stick to its main proposal: both
big banks will need an equity Tier 1 capital ratio of at least
10 percent, versus the 7 percent minimum set under the Basel III
global standards which begin to take effect in 2013.
Both UBS and the right-wing Swiss People's Party (SVP),
which holds the most seats in parliament, have warned the plan
risks making banks less competitive than foreign peers, raising
questions about whether the rules might be watered down.
For a preview of the decision, click on [ID:nLDE73H10W]
Scenarios on Swiss political process [ID:nLDE73H117]
Factbox on proposed Swiss bank rules [ID:nLDE73H112]
Factbox on the various Swiss parties' views [ID:nLDE73H10X]
Factbox on Britain's proposed regulations [ID:nLDE73A0L9]
Switzerland is at the forefront of a global push to increase
oversight of the financial industry after bailing out UBS during
the financial crisis. UBS and Credit Suisse together have
balance sheets more than twice the size of the economy.
Britain too is considering implementing capital standards
more stringent than Basel III, though these would apply only to
big retail banks. [ID:nLDE7371AX]
The laxer treatment of investment banks by Britain is
providing further ammunition to those lobbying to lessen the
so-called "Swiss Finish."
UBS Chief Executive Oswald Gruebel has said the stiff Swiss
standards could force UBS to move units abroad. In contrast,
Credit Suisse has termed the proposed standards "tough but
The finance ministry hopes the matter will be voted on by
the end of the year.
Yet with Switzerland gearing up for national elections on
Oct. 23, the question of how much capital banks should hold will
probably be subject to wrangling in parliament and the proposals
may still be amended or held up.
(Editing by David Holmes)