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Credit Suisse And Ubs Told To Raise More Capital

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A Swiss government-appointed commission has said banking giants Credit Suisse and UBS should raise more capital because they are "too big to fail".

It wants them to raise their common equity ratio - measuring the ability to absorb losses on investments - to 10%.

This is higher than a new international requirement of 7%, although the banks have been given until 2018 to comply.

The two banks together have liabilities that are more than four times the Swiss economy's entire annual output.

The Swiss "expert commission" is also recommending that the total capital ratio of the banks - a broader measure that includes debts that can be converted into equity - be raised to 19%.

Again, this is much higher than the international standard agreed by the Basel committee of central bankers, which sets the bar at only 10.5%.

The higher levels required by the commission reflect the sheer enormity of the two banks, and the threat a failure by either one could pose to the Swiss economy.

"The measures will strengthen the long-term resilience and competitiveness of the Swiss financial centre," said Philipp Hildebrand, chairman of Switzerland's central bank, which was represented on the commission.

I'm sure there is nothing to worry about.

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