SNB Brings Raiffeisen Under Stricter Supervision

By Neil MacLucas 

ZURICH--The Swiss National Bank said Wednesday it has added the Raiffeisen Group of cooperative banks to a list of financial institutions that will come under more stringent supervision, the latest move to limit risk in the Alpine country's financial system.

The Zurich-based central bank said Raiffeisen Group, which is active in the country's mortgage-lending market and is Switzerland's third-largest banking group, will be required to follow too-big-to-fail rules that already apply to some of the country's largest banks. The rules require the banks to raise their capital and liquidity bases, among other things.

The SNB said the decision was made in conjunction with the Financial Market Supervisory Authority, or Finma, Switzerland's financial industry regulator. UBS AG and Credit Suisse Group AG, as well as Zuercher Kantonalbank, are already subject to the more-stringent rules.

The move to more tightly regulate St. Gallen-based Raiffeisen, which has more than 300 cooperatively structured banks and around 1,032 branches, comes as Swiss regulators and politicians seek to rein in the country's biggest institutions in the wake of the 2008 bailout of UBS. In June, the SNB said "significant progress" has been made by the country's largest banks in improving their capital positions over the past year, although more needs to be done to shore up their leverage ratios.

The banks' leverage ratios are becoming more important as investors focus on the measure during times of stress, the SNB said. Next year, international rules will require globally active banks to disclose their leverage ratios, making direct comparisons possible.

Separately on Wednesday, Raiffeisen Group reported a 2.8% rise in assets under management to 192.3 billion Swiss francs ($211.8 billion) for the six months through June 30 and said mortgage lending rose 2.4% to 147.2 billion francs.

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