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Swiss to adopt new global financial rules quickly

BERNE - Switzerland plans to quickly implement emerging new global standards for the financial sector that will be discussed at a Group of 20 nations this week, the country’s financial supervisory authority said on Tuesday.

“We want to quickly and efficiently implement the regulatory measures that have been introduced or that are emerging from international standard-setters,” Patrick Raaflaub, director of regulator FINMA said at a press conference on Tuesday.

“These plans will include a dramatic increase in capital requirements,” he added.

Switzerland moved quicker than other countries by toughening already last October the capital regime for the country’s two largest banks, UBS and Credit Suisse.

Domestic banks were exempted from the stricter capital rules, but this exemption will have to be reviewed in the light of upcoming new international rules, Daniel Zuberbuehler, deputy chair of FINMA’s board of directors added.

Domestically, FINMA planned to introduce tighter restrictions on liquidity management for the financial sector and try to reverse some distortions in accounting standards.

In particular, the regulator wants to address the pro-cyclical effect of some accounting rules that put pressure on banks at time of crisis.

The Swiss regulator was also planning to publish guidelines on executive pay in the Swiss financial sector following recommendations by the Financial Stability Forum.

Raaflaub said Switzerland was looking to introduce new pay guidelines for all financial institutions and not, like in some other countries, only for those that had received state help.

Bankers’ large pay checks have met sharp criticism as a result of the crisis and domestic pressure has forces many banks to cut pay and axe bonuses.

FINMA also said on Tuesday markets remained fragile and the deepening economic recession continued to pose risks to the survival of some financial institutions.

“The crisis has substantially weakened many organisations,” FINMA said in a statement ahead of its annual news conference.

“While markets have calmed down a bit, they are still fragile. Fresh shocks could result in further price falls, and even threaten the solvency of some institutions,” it said.