BASEL (MNI) – The new bank capital rules agreed on Sunday are only
a minimum requirement, Swiss National Bank Chairman Philipp Hildebrand
said Monday.

Speaking to reporters at the Bank for International Settlements,
the SNB head said that the new rules create a good basis for dealing
with the “too-big-to-fail” issue.

Large Swiss banks will not have difficulties meeting the new
additional capital requirements, Hildebrand said.

“The banks have many possibilities to build up capital, especially
in the long run,” he said, adding that the long-term view is one of the
reasons that the SNB had always supported extended transitional periods.

“Therefore, I am convinced that [the banks] have many possibilities
…to build up the additional capital buffers that are necessary,” he
argued.

The new rules do not put Switzerland at a competitive disadvantage,
Hildebrand emphasized. “We must always keep in mind that in the first
place these are minimum standards for the whole world, especially what
concerns the systemically relevant financial institutions.”

“Secondly, in Switzerland we also have a special business model
with asset management in the center, which certainly has profited
historically from large buffers of equity capital,” Hildebrand
explained.

The new minimum standards, which require that systemically relevant
financial institutions have additional capacity to absorb loss “of
course has an effect on Switzerland,” as well as other countries,
Hildebrand underscored.

Switzerland’s expert commission, which has the mandate of looking
at solutions to the too-big-too-fail problem, now “has a good basis” on
which to finalize its report to the government due in the next couple of
weeks.

Pressed as to whether the capital ratio rules for institutions
deemed “too big too fail” needed to be increased, Hildebrand said, “For
now, I do not want to anticipate. The expert commission now has two
weeks to send its report. But as I said, a very important part of the
standards is clear, that systemically relevant international
institutions must have additional capacity to absorb losses.”

“By the way, it is also true that the standards have been
ratified here yesterday are clearly minimum, global minimum, standards,”
he emphasized.

–Frankfurt bureau; +49-69-720-142; frankfurt@marketnews.com

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