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Swiss Bankers Seek Strengthened FINMA

by Ulrika Lomas,, Brussels

22 September 2010

Emphasizing the need for Switzerland’s financial centre to have a first-rate regulator, Patrick Odier, President of the Swiss Bankers Association (SBA) has called for the country’s Financial Market Supervisory Authority FINMA to be strengthened in future. In order to maintain Switzerland’s competitiveness and to avoid over-regulation, it is also vital to maintain an open dialogue with the authorities, Odier added.

During the SBA’s recent Annual General Meeting held in Interlaken, Odier underlined the fact that Swiss banks are in no way opposed to effective regulation. On the contrary, according to Odier proportionate regulation guarantees stability and reliability, thereby increasing scope for growth and wealth creation.

Alluding to the Basel III agreement, the new international banking regulation framework, Odier warned, however, of the dangers of over-regulation which would prove detrimental to both the Swiss financial centre and to the wider economy. Any new regulations must be proportionate, differentiated and internationally coordinated, he stressed, adamant that Switzerland should not take any unilateral measures.

FINMA, the body responsible for implementing the Basel III agreement in Switzerland, is reportedly considering applying even tighter regulations and even greater capital requirements to the recently agreed framework, although it remains as yet unclear as to exactly what this so-called “Swiss Finish” could be.

However, the SBA’s President warned that tightening the regulations too much would result in a competitive disadvantage for Swiss banks, which in turn would have a negative impact on the Confederation’s economy as a whole.

Underlining the fact that in global comparison Switzerland is already ahead of other countries in terms of its regulatory requirements, Odier noted that all Swiss banks are currently required to hold an extra 20% capital cushion above and beyond the requirements stipulated in the Basel standard. Indeed, the Confederation’s two largest banks must hold 50-100% more capital than the requirements laid down in the Basel II agreement. In addition, FINMA introduced a new liquidity regime for the big Swiss banks back in June, he remarked.

As an aside, Odier expressed his confidence that ongoing tax disputes between Switzerland and other states would successfully be resolved contractually. Odier welcomed recent remarks made by Germany’s Finance Minister Wolfgang Schäuble during an economics conference in Basel. Schäuble revealed that ongoing negotiations between Germany and Switzerland regarding a bilateral tax agreement would be completed by the end of October. The agreement, he explained, would include a combination of a withholding tax and an administrative assistance procedure.

TAGS: tax | economics | banking | offshore | agreements | offshore banking | withholding tax | Germany | Switzerland | regulation

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