UPDATE 1-Swiss aim to enforce tougher bank capital rule in Jan

* Basel Committee agreed international delay to end of 2011

* Swiss to adopt EU rules on interbank risk diversification

(Adds details, background)

ZURICH, July 14 (BestGrowthStock) – Swiss regulators said on
Wednesday they aim to implement stricter rules on the amount of
capital banks must hold to cover risks from trading operations
in January, putting the country ahead of its peers in the global
push for tougher bank regulation.

The Swiss also aim to put European Union rules on the risks
banks incur on the interbank market in place by Jan 1, 2011.

In mid-June the Basel Committee of central bankers and
supervisors agreed to delay its tough new capital requirements
on bank trading books by a year. [ID:nLDE65H1RF]

But Swiss banking regulator FINMA on Wednesday launched the
consultation process on changes rules based on the proposals
made by the Basel Committee on Banking Supervision, giving banks
and organisations until Aug 20 to comment.

Switzerland led a global push for tighter banking regulation
after the government had to bail out the country’s largest bank,
UBS (UBSN.VX: ), at the height of the financial crisis.

The country has already introduced higher capital
requirements, a leverage ratio, a stricter liquidity regime and
new rules for bankers’ pay.

“During the financial crisis, the losses incurred in
business operations and securitisations significantly exceeded
the amount of capital required to cover them,” FINMA said.

In addition, governments had to step in to prevent contagion
in the wake of bank failures during the financial crisis, when
interbank lending ground to a halt and money markets froze.

“Swiss regulations on banks and securities dealers are based
on the minimum standards on capital adequacy proposed by the
Basel Committee and those issued by the EU on risk
diversification,” FINMA said.

A government commission has made further far-reaching
proposals to limit the risk that a failure of one of the large
banks could drag the whole economy down.

This “too-big-to-fail” commission is due to publish its
final report at the end of August.

The Swiss National Bank, responsible for the country’s
financial stability, has already called for more tightening of
capital requirements.

For the FINMA statement click:
www.finma.ch/e/aktuell/pages/mm-eigenmittel-risikoverteilung-20100714.aspx
(Reporting by Sven Egenter; Editing by Hugh Lawson)

UPDATE 1-Swiss aim to enforce tougher bank capital rule in Jan