Swiss financial regulators are planning to devise new emergency powers that would allow them to split large banks, and close their troubled business units that are not necessary to the economy. The Swiss National Bank, in its latest financial stability report, mentioned that it wanted to create a better approach than bailouts to tackle big banks, whose failure would destabilise the entire financial system, reported NY Times.
Swiss banking officials have seen the problem with more apprehension than the other European counterparts, mainly because UBS and Credit Suisse are so big in proportion to the Swiss economy. With assets equivalent to six times Swiss GDP, they had created quite a stir among authorities about the dangers their size posed to the Swiss economy, when they reported heavy losses.
Philipp Hildebrand, Vice Chairman of the Swiss National Bank, said: “There can be no more taboos, given our experiences of the last two years. There are advantages to size, but in the case of the large international banks, the empirical evidence would seem to suggest that these institutions have long exceeded the size needed to make full use of these advantages.”
