SNB says Swiss banks can succeed with tougher rules

ZURICH (Reuters) - Switzerland's big banks Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) and UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) will be able to stay active in investment banking even if tighter capital rules are introduced, the Swiss National Bank said.

Earlier this month, Switzerland's top banking watchdog told Reuters UBS and Credit Suisse face more stringent capital rules by October which would curtail their investment banking and dividend payouts.

In an interview published in Swiss daily Tages-Anzeiger on Friday, Philipp Hildebrand, who is in charge of financial stability at the Swiss central bank, defended the plans.

He said wealth management was the foundation of Switzerland's success as a financial centre and it required a stable environment to keep client trust.

"I therefore think it is very unfortunate if you put financial stability and competitiveness in conflict," he said, adding he had considered warnings from the banks they could be forced to move investment banking abroad.

"We have come to the conclusion that the integrated bank model can be successful even with significantly tougher capital and liquidity requirements," he said.

The new rules are being discussed with UBS and Credit Suisse but the head of the Swiss Federal Banking Commission Daniel Zuberbuehler has said he is determined to introduce them.

"These proposed rules on higher capitalisation -- introducing an extra capital buffer for losses and using the leverage ratio -- are up for discussion now but we are serious about introducing them," Zuberbuehler told Reuters this month.

The introduction of the leverage ratio would scrap the banks' right to set aside less capital for assets such as loans which they judge less risky.  Continued...