Credit Suisse (CS), UBS AG (UBS) to Create Domestic, Non-Investment Banks

Michael Teague  |

While major US financial institutions were enjoying a solid gains amid heavy trading on Thursday, less attention was paid to some significant moves made by Swiss banks UBS AG (UBS) and Credit Suisse Group (CS) .

Credit Suisse, the country’s second-largest bank, announced on Thursday that it would submit a proposal to Swiss regulators that would see its domestic operations walled off into a separate unit, with the intent of precluding the need for a taxpayer funded bailout should global economic conditions take another turn for the worse.

The announcement comes shortly after UBS, the country’s largest bank, said it had been considering a similar course of action, and for the same reasons.

The new domestic segments would be entirely separate from either company’s investment banking operations, ostensibly protecting Swiss citizens from the most pernicious consequences of another financial crisis. The separation from investment banking would also lower capital requirements that have increased dramatically for large financial institutions since 2008.

The Swiss banks have claimed that the effort is the result of the lack of progress on a global framework for financial regulation in the wake of 2008’s crash. Government regulators in the US and the UK have both sought to impose a variety of measures and requirements on financial institutions both foreign and domestic, however. Credit Suisse commented on the news by saying “These changes are designed to both meet future requirements for global recovery and resolution planning and result in a substantially less complex and more efficient operating infrastructure for the bank,”.

UBS AG was trading only slightly lower heading towards the closing bell, down 0.11 percent to $18 per share, while Credit Suisse was up 0.70 percent to $28.61.

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