It remains to be seen whether or not these will be commonly agreed international standards or instead be shaped by individual country regulators.
On October 4, the Swiss Federal Council published the recommendations of its commission of experts on what these surcharges should be for the country’s two biggest banks. Switzerland intends to require 19% of total capital against risk-weighted assets; 10% must comprise common equity; the other 9% must be in the form of contingent capital notes that would convert into common equity if either bank’s common equity ratio falls to 5%.
These are eye-watering amounts of capital, although both UBS and Credit Suisse had been bracing themselves for even worse from the so-called ‘Swiss finish’ that their national regulators were always going to impose.
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