The Federal Council, Switzerland's 'seven-headed president,' has set new capital adequacy standards for systemically important banks and taken other steps to reinforce their general resilience.

The 'leverage ratio' for global systemically important banks will be set at 5%. In addition, these banks must meet hold an equal amount of "gone concern" capital. This means that required total loss-absorbing capital will amount to 10% of total exposure. They must have fully-operational emergency plans in place by 2019.

Switzerland already has a 'too big to fail' regime, but the Government has long wanted to strengthen it.

Banks that are important to the global financial system must now fulfil requirements for two different types of loss-absorbing capital: capital to absorb current operating losses ('going concern' capital) and capital to fund an orderly resolution ('gone concern' capital).

The 5% 'leverage ratio' relates to the bank's total exposure as a measure of its on- and off-balance sheet positions. At least 3½% of this must be held in the form of Common Equity Tier 1 capital (CET1) and the remainder in Tier 1 instruments, which would be converted or written down if the CET1 ratio falls below 7% (the 'high trigger'). In addition, these banks must hold 5% of loss-absorbing debt capital, again measured in terms of total exposure. This bail-in capital (gone concern) is earmarked for use in the event of resolution. The result in terms of risk-weighted requirements is a total of 28.6%, consisting of 14.3% for each category. At least 10% must be held in the form of CET1 capital.

The two largest banks have continually built up their capital resources since the introduction of TBTF legislation in 2012. At present, the 'leverage ratios' of UBS and Credit Suisse stand at 3.6% and 3.7% respectively. Both banks have also already issued several billion francs of bail-in capital at holding company level.