© Reuters. FILE PHOTO: Logo of Swiss bank Credit Suisse is seen Zurich


By Brenna Hughes Neghaiwi

ZURICH (Reuters) – Economic and financial conditions for the Swiss banking sector have deteriorated markedly due to the COVID-19 pandemic, the Swiss National Bank said on Thursday, but big banks UBS (S:) and Credit Suisse (S:) are favourably placed to manage challenges.

“The simultaneous deterioration in the economic situation in all regions of the world, together with the unusually high level of uncertainty, poses significant challenges for the two globally active Swiss banks, Credit Suisse and UBS,” the central bank said in its 2020 financial stability report.

“However…both of the globally active Swiss banks are well placed to face the challenges posed by the current difficult

environment and support the real economy. This favourable

situation is attributable to risk reduction and, in particular,

to the build-up of capital buffers over recent years,” it said, adding these development fell in line with ‘too big to fail’ regulations.

UBS and Credit Suisse had until the end of 2019 to prepare so-called resolution plans that would prevent taxpayers from having to bail them out in the event of a crisis.

The Swiss National Bank (SNB), which helps oversee the stability of the country’s financial system, said thanks to capital build-up, the two banks would be able to cope with significantly worse economic developments than assumed under its baseline scenario.

It said it expected a number of domestically focused banks to incur losses as their profitability fell from an already low level, adding a longer and deeper downturn would have a more negative impact on the quality of domestically focused lenders’ loan portfolios.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.