The Swiss National Bank has asked the country’s banking giant UBS and Credit Suisse to stack up their leverage ratios due to the substantial risks still faced from economic and legal issues.
Leverage ratio is a measure of a bank’s capital relative to its total assets without any adjustment for risk. At the end of the first quarter, both the banks reported a leverage ratio of 3.8%.
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However, the SNB conceded that the two largest banks had both made "significant progress" in strengthening their capital positions since it issued a similar warning last year.
UBS and Credit Suisse have made significant changes in recent years to comply with the Swiss interpretation of tougher international rules set to take effect in 2019.
Switzerland requires its major banks to have capital ratios of at least 19%, of which 10% would be common equity. That’s stricter than the 10.5% capital ratio and 7% of equity required by Basel III reforms.
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