Swiss National Bank Calls for Financial Reforms Following Credit Suisse Collapse

The Swiss National Bank highlighted ongoing weaknesses in the Swiss financial regulatory framework following the 2023 collapse of Credit Suisse, emphasizing the need for reforms. After Credit Suisse was absorbed by UBS in a state-backed rescue, concerns arose about the systemic risks posed by such large banks, leading the government to propose stricter regulations for "too big to fail" institutions in April.

Key proposals included increasing UBS's capital requirements, although these reforms are still navigating a lengthy political process. In its annual financial stability report, the SNB echoed the Federal Council's call for action on capitalization, liquidity requirements, early intervention protocols, and recovery planning.

Despite UBS now having stronger capitalization compared to Credit Suisse pre-crisis, the SNB acknowledged persisting weaknesses in the regulatory regime that need to be addressed. Additionally, the central bank supported a review of the liquidity coverage ratio, particularly after retail deposit outflows during the Credit Suisse crisis exceeded earlier assumptions.

Separately, Switzerland's financial regulator recently determined that UBS's takeover of Credit Suisse did not raise competition concerns, despite recommendations from the antitrust watchdog for further scrutiny.