UBS AG and Credit Suisse Group AG may need to downsize with higher ratios
The largest banks of Switzerland, namely UBS AG and Credit Suisse Group AG, may be required to downsize their fixed-income, currencies and commodities operations should the nation's regulatory authorities impose higher leverage ratios instead of originally planned. This observation was made by analysts from JPMorgan Chase & Co.
Credit Suisse AG would be affected the most by the imposition of the rules requiring the retetion of higher capital in relation to their existing assets. The observation was made by Kian Abouhossein and his fellow analysts today, in a note sent out to clients. Both firms are estimating that the Swiss leverage ratios would be pegged at 4.2% by year 2015. A Finance Ministry proposal had the ratio pegged at 6%. At this rate, the analysts said, there would be 'material uncertainty' and possible cutbacks in FICC.
According to Swiss Finance Minister Eveline Widmer-Schlumpf, in an interview published by Schweiz am Sonntag yesterday, said leverage ratios between '6% to 10% are being discussed.' She said the current level is too low and added banks would have to 'consider whether carry on with investment banking or focus even more on asset management.'