UBS, Credit Suisse should curb risk, says Swiss govt

The Swiss government proposed measures designed to curb risk-taking at UBS AG and Credit Suisse Group AG as it bids to win parliamentary approval for a tax treaty with the US.

“The risks of systemically important banks should be restricted, as more stringent capital, liquidity and risk diversification requirements will be set out,” the government said in a statement from Bern today. The laws, based on proposals last month by a government-appointed panel, could be in force as of January 2012.

Switzerland needs parliament to support a treaty that could disclose data on as many as 4,450 UBS accountholders to US tax authorities. An agreement brokered to protect the bank from a lawsuit in the US was jeopardised when a Swiss court in January ruled it isn’t fully enforceable. The Social Democratic Party is linking its consent to stricter banking regulation.

The measures are intended to prevent another state- sponsored bank bailout after the government invested 6 billion francs ($5.4 billion) in UBS in 2008.

Switzerland’s parliament could vote on today’s proposed measures and schedule during its next session which begins on May 31. Approval by lawmakers would make the planned changes binding for both the government and parliament and would mean the formal start of the legislative process.

“This was about making sure to start and speed up the legislative process, and it won’t be able that we lose sight of the goal,” Finance Minister Hans-Rudolf Merz said at a press conference in Bern today. The proposals are subject to detailed discussions in parliament and may change, he said.