December 1, 2016 / 5:00 PM / 3 years ago

Credit Suisse's Swiss spin-off faces same capital rules as group

ZURICH (Reuters) - Credit Suisse’s newly minted Swiss bank will be held up to the same capital standards as its global parent, Switzerland’s State Secretariat for Financial Matters (SIF) said on Thursday.

The logo of Swiss bank Credit Suisse is seen at a branch office in Zurich, Switzerland July 28, 2016. REUTERS/Arnd Wiegmann/File Photo

As a subsidiary of a global systemically important bank (GSIB), the Swiss unit — which launched as Credit Suisse (Schweiz) AG in November — will need to keep at least 10 percent of risk-weighted assets in common equity tier 1 (CET1) capital, SIF said.

The minimum 10 percent CET1 ratio is more than double the 4.5 percent required under the international Financial Stability Board’s 2022 standards for global systemically important banks.

“The same GSIB rules apply to the subsidiary as to the parent group,” a SIF spokesman said, adding minor differences might arise from differing focuses of the parent and domestic bank.

Credit Suisse (Schweiz) AG, which is run by Credit Suisse veteran Thomas Gottstein, is expected to list on the stock exchange next year, when it hopes to raise 2 to 4 billion francs by selling a 20-30 percent stake.

Credit Suisse declined to comment.

“It’s potentially tougher than people might have imagined,” Barclays analyst Jeremy Sigee said.

Sigee, however, did not view the requirements as a major negative for the bank.

“I think they probably would have wanted the unit to be reasonably well capitalized,” he said.

Last year, the Swiss government outlined tough new capital requirements for its two biggest banks, UBS and Credit Suisse, to protect the economy from a major banking collapse.

From the end of 2019, UBS and Credit Suisse must also have a leverage ratio of 5 percent with at least 3.5 percent made up of CET1 capital.

(This story was refiled to correct spelling of analyst’s name in 7th and 8th graph)

Reporting by Brenna Hughes Neghaiwi and Joshua Franklin; Editing by Alexandra Hudson

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