February 14, 2018 / 11:13 AM / 10 days ago

Swiss government to ease TBTF tax burden on big banks

ZURICH (Reuters) - The Swiss government said on Wednesday it aims to make it easier for systemically important banks like Credit Suisse (CSGN.S) and UBS (UBSG.S) to accumulate capital by eliminating some tax obligations on too-big-to-fail (TBTF) instruments.

    Big banks’ parent companies must issue TBTF instruments from Jan. 1, 2020, according to Swiss financial watchdog FINMA requirements, after which the funds are transferred internally to group companies that need capital.

    The government decided to exclude TBTF instruments’ interest expense from financing expenses. Additionally, funds from TBTF instruments transferred to group companies are to be excluded from the group parent company’s consolidated financial position.

    “More taxes lead to lower capital and are thus inconsistent with the TBTF legislation’s aims,” the government said in a statement.

    Reporting by John Miller, editing by Michael Shields

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