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Switzerland proposes minimum 3 percent leverage ratio for all banks

Staff Writer | April 8, 2017
Swiss banks will have to maintain a leverage ratio of 3 percent under draft proposals unveiled by the finance ministry that will also apply to small banks that have no minimum leverage ratios now.
Swiss banks
Europe   To strengthen banks
Banking regulators around the world have been working on rules to strengthen banks following the 2007-2009 financial crisis.

The leverage ratio measures banks' core capital as a percentage of total assets without adjusting them for risk weightings. It helps to ensure banks have enough capital to support their lending.

The finance ministry also proposed a risk concentration rule which would in principle bar banks from having large exposures exceeding 25 percent of core capital.

"There will be further changes for the financing of residential properties and for Swiss mortgage bonds," it said.

The ministry said these proposed revisions to Swiss capital adequacy rules implement two additions to the international standards for banks known as Basel III.

There is a consultation period for the proposals which runs until July 14. Final revisions should take effect in January 2018 for the leverage ratio and in January 2019 for risk diversification.