The Swiss government said on Wednesday it was raising its bank deposit guarantee to 100,000 Swiss francs ($85,400) from 30,000 francs as part of a package to shore up the country's crucial financial industry. The government also said the banking regulator will finalise stricter capital requirements with UBS and Credit Suisse by the end of the month.
The banks will then have until 2013 to put aside the extra capital needed to comply. "We are forcing the banks to put aside more liquid assets in Switzerland," Finance Minister Hans-Rudolf Merz told a news conference. The steps are part of a package of measures aimed at bolstering the financial sector which accounts for nearly 15 percent of Swiss output and come after a state bailout of UBS last month that allowed it to unload $60 billion of toxic assets.
The government is lifting the total amount it is ready to guarantee to protect investors to 6 billion francs from 4 billion. The measures will come into force as soon as necessary laws are changed and will be valid until December 31, 2010. The increase in the Swiss deposit guarantee comes after the European Union agreed last month to up the minimum guarantee in the bloc to 50,000 euros ($68,300), with the European Commission proposing a further rise to 100,000 euros by the end of 2009.
"Clients can therefore be sure that their preferred deposits are secure in every bank in Switzerland," the finance ministry said in a statement. The ministry said it also plans to allow more generous immediate payments of guaranteed deposits at any bank that gets into difficulties. The sum allowed will be considerably more than the current 5,000 franc limit, but no figure was given.
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