Tough new rules for big Swiss banks

Swiss legislators have moved to drastically toughen capital requirements on big banks Credit Suisse and UBS amid concerns their failure in a crisis could drag down the Alpine country's economy.

Lawmakers in the upper chamber of parliament, the Council of States, approved the measures expected to cost each bank $90 billion in a preliminary vote late on Tuesday and were due to cast a final vote on Thursday.

The measures would require the banks to hike their high-quality core common equity – which can be converted into cash quickly – to 10 percent of assets, plus hold another nine percent in bonds that could be converted if needed.

The measures are considerably tougher than the Basel III international standards under which banks are to raise their high-quality core common equity to 7.0 percent of assets from the current 2.0 percent.

UBS has criticised the measures which it says will put it at a competitive disadvantage.

Credit Suisse meanwhile has voiced support for the regulations, with its chief executive Brady Dougan declaring that the bank is an “early adopter” of more stringent rules.

In February, the bank raised $6 billion by issuing convertible bonds to Qatar Holding and Saudi Arabia’s Olayan Group, in order to get ahead with meeting the new capital requirements.

“The capital requirements are strict but will be achievable for the bank,” a Credit Suisse spokesman said on Wednesday.

The lower house of parliament will not take up the government-proposed bill until after the summer break, according to a spokesman.

The measures were proposed by experts last year after a government rescue of UBS during the 2008 global financial crisis.

Last year, a commission of experts advised the government to adopt measures tougher than the Basel III standards as Credit Suisse and UBS are regarded as “too big too fail” because of their size and influence on the Swiss economy.

Beyond tougher capital rules, the government also wants oversight on the remuneration policies of large banks that have had to be bailed out using federal funds.

Under the proposed bill, banks which require state aid could be subject to adjustments on their wage policies, including a complete ban on bonuses or other forms of variable remuneration.

UBS had to be shored up during the financial crisis by a multi-billion dollar state rescue package.

The measures would also require the two banks to keep a 30-day liquidity reserve on hand in case markets seize up, as happened during the financial crisis, and prove they would be able to keep vital services running in case of bankruptcy.

If the banks were to take state aid in the future, they would not be able to pay bonuses without government approval.

The Swiss central bank estimated last year the measures, which would come into force by 2019, would cost each bank around 76 billion Swiss francs ($90 billion).

“The new regulations are not excessive,” the central bank’s Vice President Thomas Jordan said in an interview with the Neue Zuercher Zeitung last month.

“I am convinced that the competitiveness of Swiss banks is not being threatened,” he added.

In Britain, finance minister George Osborne was expected to endorse on Wednesday a call for British banks to ring-fence their retail business from their investment arms to avoid another financial crisis.

UBS shares closed 1.62 percent lower and Credit Suisse was off 0.96 percent while the broader stockmarket finished down 0.92 percent.

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Cashless payments in Switzerland: What is Twint and how does it work?

If you live in Switzerland, you are likely no stranger to Twint and maybe even use it regularly to make and receive payments. But if you are not familiar with this app, this is what you should know.

Twint app can be installed on a mobile phone.
“Twinting” money with a smartphone is easy and convenient. Photo by Andrea Piacquadio from Pexels

In Switzerland, the word “Twint” is used both as a noun and a verb.

As a noun, it describes the mobile application which allows you to pay for various goods and services practically everywhere in the country.

As a verb, (“to twint”), it means to send someone money, or receive it, via the same app.

So what exactly is Twint?

Simply put, it is digital cash (not to be confused with bitcoin, which is digital currency) that was first introduced in Switzerland in 2014 and has become very popular since then.

Twint logo. Image by

People like it because it is an easy and quick way to make instantaneous payments, especially in situations when credit cards or physical cash can’t be used.

A big part of its convenience is that it can be used at cash registers, vending machines and parking meters, as well as in online shops — pretty much everywhere in Switzerland, even in places that don’t accept credit cards.

The only similar mode of payment would be your maestro debit card issued by your bank.

This video explains exactly how the process works.

Another advantage of Twint is that you can use it to send money to someone else’s mobile phone — as long as they also have Twint. And you can receive money the same way.

And there are no fees or charges for this service.

How does Twint work?

Anyone can use Twint, but you need a Swiss bank account or a credit card and, of course, a smartphone.

According to Twint website, you need a smartphone with either an iOS (from version 12.2 and upwards) or Android (from version 7 and upwards) operating system and Bluetooth capability (from version 4.0 and upwards).

“It is generally not possible for Twint to be used on Apple devices with an operating system older than “iOS 12.2” or on Android devices with an operating system older than “Android 7”. On Android devices without access to the Google Play Store (e.g. on certain HUAWEI models), the use of Twint app is also not possible”.

But If you have a compatible phone, installing Twint is easy.

Swiss banks offer their own version of the app, and you can download it directly from your bank’s website.

Then, when you use Twint to make a payment, the amount is debited directly from your bank account or credit card.

By the same token, if you receive payment from another Twint user, the money is automatically deposited in your account.

And you are not limited to just one Twint app.

If you have accounts is several banks, or have more than one credit card, you can install and use all of them.

READ MORE: How to open a bank account in Switzerland

Can Twint be used to make payments and receive money from abroad?

For the moment, Twint can be used solely in Switzerland and payments can be made only in Swiss francs – although this may change in future. 

“We are, however, working closely with providers in other countries to develop an international and multi-currency solution”, according to Twint website.

You can find more information about Twint here.

READ MORE: Which bank is best for Americans in Switzerland?