Switzerland Orders Banks to Hold Real Estate Risk Buffer

House · Feb 13, 2013

A rare proactive approach

Banks will be forced to hold an extra 1 percent of risk- weighted assets linked to domestic residential mortgages, the government in Bern said in a statement today. Lenders would have to add about 3 billion francs ($3.26 billion) to comply with the new rules, which will be enforced from Sept. 30.

Property prices from Zurich to Geneva are surging as investors funnel money into one of Europe's most stable economies amid the sovereign debt crisis and record-low interest rates. While the government in July toughened rules on mortgage lending to avoid a repeat of a property collapse in the early 1990s, the Swiss National Bank asked for the buffer to be activated as the market continued to rise.
"We want to counter pre-emptively the possibly difficult consequences of a bubble," Swiss Finance Minister Eveline Widmer-Schlumpf said at a briefing today. "If the situation stabilizes, we can abolish it the same way we introduced it."
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Switzerland Orders Banks to Hold Real Estate Risk Buffer

House Well-Known Member Silver Stacker

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Switzerland Orders Banks to Hold Real Estate Risk Buffer

House Well-Known Member Silver Stacker

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