SNB lauds UBS, Credit Suisse capital steps, warns on leverage

Thu Jun 20, 2013 1:50am EDT
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By Katharina Bart

ZURICH (Reuters) - The Swiss National Bank welcomed measures by Credit Suisse CSGN.VX and UBS UBSN.VX to bolster their capital levels, but said leverage ratios still lag international rivals.

"Given the prevailing risks in the environment and the losses incurred in the recent financial market crisis, the SNB still considers current leverage ratios at the Swiss big banks to be low," the central bank said in its annual financial stability report published on Thursday.

The SNB urged UBS and Credit Suisse to stay on course with planned measures that it said are likely to lead to a "substantial" improvement in leverage ratios by year-end.

UBS and Credit Suisse both reported a leverage ratio of 3.8 percent at the end of the first quarter on a Swiss measure which is defined as the ratio of core capital to an adjusted balance sheet total.

The report, released ahead of the central bank's June monetary policy assessment expected at 0730 GMT, comes after both banks have cut back their investment banking arms.

UBS said its leverage ratio stands just short of 2019 requirements. A spokesman for Credit Suisse declined to comment.

Credit Suisse has pruned risky assets and raised capital since last year's SNB stability report, which caused its shares to plummet to their lowest level since 1992 by suggesting it halt dividends or issue shares to bolster capital.

Credit Suisse paid a 2012 dividend of 0.75 francs per share, with only 0.10 francs in cash and the rest in shares. It flagged a return to an all-cash payout after it meets key capital ratios, expected for mid-2013.   Continued...

A worker uses a cordless screwdriver to fix the logo of Swiss bank Credit Suisse at a branch office in Zurich February 4, 2013. REUTERS/Arnd Wiegmann