Yesterday, in response to “too big to fail” concerns, a Swiss government committee announced that it unanimously agreed to increase the capital requirements for Credit Suisse and UBS, two systemically important banks whose combined balance sheets are five times the size of the Swiss economy. Backed by both the Swiss National Bank and FINMA, the new rules would require capital of 10% in common equity and 19% in total capital by 2019, which is an increase from the proposed Basel III standards, which require capital of 7% and 10.5% respectively. The three other measures in the proposal relate to organization, liquidity and risk diversification.

Implementation awaits approval by the Swiss Parliament; however, Credit Suisse responded yesterday that the requirements are “very tough” but “it can meet the new requirements within the prescribed timeframe by building capital through earnings and by issuing contingent convertible bonds.”