Switzerland doubles mortgage-risk buffer for banks

GENEVA (AP) — The Swiss government is doubling the amount of capital banks must hold against residential mortgage risks as it tries to prevent the country's property market from overheating.

Switzerland's governing Federal Council last year started requiring banks to hold an extra 1 percent capital cushion against real-estate risks. On Thursday, it said it will increase it to 2 percent by June 30 at the central bank's request.

A government statement said the capital cushion has helped make banks more resilient but a "sustained strong increase in mortgage loans and the prices of residential properties" has increased imbalances that "constitute a considerable risk for the stable development of the economy."

The Swiss Bankers Association said it's disappointed by the decision saying the capital cushion isn't an effective way of controlling property prices.

Related Headlines

  • Nestlé exchanges stake in L'Oreal for Galderma

    Swiss food and drink group Nestle is creating a new unit for medical skin treatments via a deal that reduces its stake in French cosmetics company L'Oreal. The Vevey, ... 

  • Litigation costs weigh on Credit Suisse's Q4

    Litigation costs weighed on Switzerland's second-largest bank, Credit Suisse, in the fourth quarter. The bank reported Thursday a net profit of 267 million francs ($295 ... 

  • Orange diamond fetches $35.5M at Geneva auction

    The largest fancy vivid orange diamond ever sold at auction went for $35.5 million in Geneva, where a pink diamond estimated to be worth more than $60 million is also on the ... 

  • Brady W. Dougan

    Credit Suisse profits disappoint in Q3

    Credit Suisse Group posted Thursday an unexpectedly small rise in third-quarter profits due mainly to weak results in its investment banking unit, sending shares down almost ...