’ going and gone - concern loss - absorbing capacity as well as improve their resolvability in a crisis. both of these sets of requirements must be addressed if switzerland ’ s ‘ too big to fail ’ problem is to be solved. domestically focused banks i would now like to turn to the domestically focused banks. these institutions ’ biggest risks continue to stem from the mortgage and real estate markets. i will make three points in this regard. first, imbalances on the mortgage and real estate markets persist. although mortgage growth has remained relatively low in 2017 – as in the previous year – developments on the real estate market show a somewhat different picture : price growth in the residential property segment 2 had been falling since 2013, but recently transaction prices have started to pick up again. moreover, with the exception of a few quarters ( including the third quarter of 2017 ), prices in the residential investment property segment have risen markedly since 2013. as prices over this period have increased more strongly than fundamentals such as rents, risks have accumulated in this segment ; it is thus especially vulnerable to a substantial correction in the medium term. this situation is compounded by brisk construction activity in the rental apartments segment, which could lead to oversupply. signs of this can already be seen in rising vacancy rates. second, the risk appetite of domestically focused banks remains high. this is particularly evident from the affordability risk data. the share of new mortgages with high loan - to - income ratios has risen significantly in recent years and has reached a historical high. the interest rate risk of domestically focused banks likewise remains high, while their interest margin continued to decline in the first half of 2017. as long as there is pressure on margins, incentives for domestically focused banks to increase risk - taking will remain substantial. third, notwithstanding the risks in the macroeconomic environment and the banks ’ high risk appetite, snb stress tests continue to suggest that, overall, domestically focused banks ’ resilience remains adequate. thanks to robust capitalisation, most of these banks would be able to absorb the losses likely to be incurred in adverse scenarios ; given the risks i have outlined, this is welcome. in the future, too, it will be decisive for the stability of the financial system that banks hold sufficient capital to cover the risks on their books – irrespective of ongoing margin pressure. 2 single - family houses and privately - owned apartments. page 2 / 3 berne, 14 december 2017 fritz zurbrugg news conference the

a plan might trigger capital transfers to non - eu financial centres for purely fiscal reasons. our position is known : we do not want the swiss financial centre to become a privileged haven for funds seeking to avoid eu regulations. we are thus ready to consider a reform of our withholding tax regime along the line of the eu directive. we even consider the possibility of handing over to the eu part of the tax on interest earnings of eu residents. we have already 50 years of positive experiences with a withholding tax : it is a convenient and efficient way to collect resources without income declaration. we have never considered introducing any system of automatic exchange of fiscal information for our own citizens, and we are not ready to consider such a scheme for foreign depositors. we feel that our current system secures an appropriate balance between protection of the private sphere and safeguarding the interest of the state. there are many misunderstandings between switzerland and the uk about this fiscal issue. let me recall a few points : – first, it is wrong to say that foreigners can invest their funds tax - free in swiss banks. we have a 35 % withholding tax imposed on all interest and dividend payments made in favour of residents and non - residents. – second, to avoid any loophole basically due to an international failure to apply the debtor principle in withholding taxation, we are ready to reshape our system in line with the eu directive, i. e. to apply the payment agents principle in withholding taxation whenever a client of a swiss bank is fiscally domiciled in the eu. – third, and this must not be forgotten, switzerland grants full judicial co - operation to fight tax fraud. thus, our position is fair. with these measures - which are fiscally equivalent to the exchange of information - switzerland cannot be accused to be a fiscal paradise attracting foreign money like an offshore centre. with capital being extremely mobile internationally, it is evident that co - ordinated taxation policy makes sense only if it covers all the main financial centres. the eu regulation will not have to be only implemented in the member countries, but also in their many dependent and associated territories. furthermore, it is crucial for europe that similar measures are taken on a world - wide basis. without a fully watertight solution, offshore centres around the globe will expand their business at the expense of europe and this with an increasing lack of transparency and with higher global risks. one last point about fiscal harmonisation. i live in a country that counts