The Swiss government has approved a tightening of the screws for systemically important banks. They will have to cover all holdings in foreign subsidiaries. Parliament will debate this law, which targets UBS in particular, from the summer session onwards. The Swiss government wants to avoid another banking collapse. At present, UBS, Switzerland’s only too-big-to-fail bank, does not have sufficient capital to cover the risk of bankruptcy. +Get the most important news from Switzerland in your inbox The draft submitted to Parliament stipulates that systemically important banks must fully cover the book value of their holdings in foreign subsidiaries with hard core capital. Currently, only UBS is effectively affected. Systemically important banks will be required to fully back their holdings in foreign subsidiaries with core equity capital held by their parent company. Currently, this can be achieved with debt financing up to approximately 50%. Assuming parliamentary debate proceeds …