not provide absolute protection against a loss of confidence. credit suisse was always fully compliant with all regulatory capital requirements, even at the peak of the crisis. clients, market participants and rating agencies, however, were increasingly casting doubt on the bank ’ s fundamental resilience. they also questioned its ability to successfully implement the announced strategic transformation plan. ultimately, credit suisse lost the confidence of the markets. second, its at1 capital instruments were written down when state support became unavoidable. at this late stage in the crisis, they thus played an important role in the package of measures. at1 capital instruments actually contain specific features that are intended to absorb losses in the early stages of a crisis so that a bank can stabilise its situation through its own efforts. however, these features were not applied. in particular, credit suisse refrained from cancelling interest payments on these instruments despite incurring losses over a prolonged period of time. such a measure would have provided immediate financial relief for the bank. at the same time, however, credit suisse would have exposed itself to the risk of negative market reactions – and thus also to the risk that refinancing would have become even more difficult and expensive. third, customers withdrew deposits at an extremely rapid rate, especially last october, and then in particular in march of this year. credit suisse ’ s liquidity buffers were still able to cover the considerable outflows in october. in mid - march, however, its liquidity was no longer sufficient to cover the exceptionally rapid outflows. a contributory factor in this regard was that a significant portion of the liquidity held was needed for operational purposes. in addition, the collateral prepared by credit suisse was insufficient to cover the outflows using the snb ’ s existing liquidity facilities. the liquidity assistance made available on the basis of emergency law, ela +, thus created the necessary time window until a comprehensive solution to the crisis of confidence could be worked out. in future, banks should be required to prepare sufficient assets in such a way that they can be delivered to their respective central banks as collateral for existing liquidity facilities. page 5 / 8 zurich, 22 june 2023 thomas jordan, martin schlegel and andrea m. maechler news conference taken together, these observations raise an important question concerning the ‘ too big to fail ’ ( tbtf ) regulations : are these regulations adequately geared towards the timely adoption of correct

recommends that ubs continue with the capital strengthening process – including, in particular, pursuing a policy of dividend restraint. credit suisse, meanwhile, should accelerate its process and take all action necessary to expand its lossabsorbing capital base significantly during the current year. the snb also recommends that both big banks increase their transparency with regard to resilience. concretely, they should publish information on their capitalisation as defined under basel iii once fully implemented – as, indeed, ubs has done in the two most recent presentations of its quarterly results. they should also regularly calculate and disclose their risk - weighted assets according to the basel standardised approach. the results of such calculations would provide a basis for comparison with risk - weighted asset figures calculated using internal risk models. this comparison would enable the ongoing reduction of risks to be presented more transparently. implementing these two measures is necessary from a financial stability perspective. however, it is also in the big banks ’ own interest to hold sufficient loss - absorbing capital, as a high level of resilience strengthens their competitiveness in the core business of wealth management, and boosts market confidence. situation at domestically focused commercial banks i would now like to turn to our assessment of domestically focused commercial banks. there are clear and growing signs of a build - up of imbalances on the swiss mortgage and real estate markets. over the past 12 months, mortgage lending volumes and real estate prices have once again grown strongly. thus, the mortgage - to - gdp ratio, which was already high in a historical comparison, continued to increase. at the same time, residential real estate prices have reached levels that, in some cases, exceed those that can be justified by fundamental factors, such as demographics or per capita income. taking the national average, this is the case for prices of owner - occupied apartments. in some regions such as lake geneva, lake zurich and lake zug, this is the case, on average, for all segments of the residential property market. bis central bankers ’ speeches under the baseline scenario, the momentum in the mortgage and real estate markets continues. it is therefore to be expected that imbalances will continue to build up, and that, consequently, the risk of an abrupt correction of these imbalances will increase over the medium term. for domestically focused commercial banks, average capitalisation relative to regulatory requirements is at a historically high level. moreover, most of these banks ’ capital is of the highest quality, and thus loss -