UBS, Credit Suisse pass stringent Swiss test: regulator

GENEVA — Swiss big banks UBS and Credit Suisse have passed a stress test, regulator Finma said on Friday, noting that the banks are even able to withstand a European debt crisis."In its latest analysis, Finma tested the resistance of these institutions to a global recession, accompanied this time by a deterioration in the finances of European states," said the Financial Market Supervisory Authority in a statement."Should such a stress event arise, both banks would still have a solid capital base, with tier 1 capital ratios of at least 8 percent," said the regulator, referring to the measure of bank's capital adequacy.While similar in approach to tests carried out by European regulator in the European Union Friday, Finma said its tests were more stringent given "Switzerland's specificity in having large banks of great systemic importance."The stress tests conducted on the banks therefore assumed "particularly severe scenarios," said Finma.Finma noted that the possible severe situation used for the tests incorporated a global recession, accompanied by a slump in prices on the financial and real estate markets. It also added "specific and very sharp shocks assumed for some European countries."However, it found that given the two big banks' relatively low exposure to these countries, the impact of these shocks "turns out to be small."Swiss authorities have been tightening rules for the country's two biggest banks after the financial crisis, stressing the significance of the banks to the country's economy.New rules which came into effect on June 30 require the banks to hold sufficient "first-class liquid assets" to cover outflows over a period of at least 30 days should there be a crisis on the financial markets coupled with a loss of confidence.The liquidity buffer came on top of stricter minimum capital ratio requirements already imposed on the big banks more than a year ago.Under those rules unveiled in December 2008, the banks would have to meet a capital adequacy ratio -- a measure of their financial heal

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