By Noele Illien
ZURICH (Reuters) -The Swiss National Bank will provide funds secured against mortgages to all commercial banks, expanding liquidity provision to the sector, Vice Chairman Martin Schlegel said on Thursday.
To take advantage of the support, which had previously only been available to systemically important banks, lenders must be able to transfer the mortgages to the central bank.
“No matter their size, banks can find themselves in a situation where they need significant liquidity quickly,” said Schlegel, citing risks, such as general uncertainty in the banking sector or cyber attacks on individual lenders.
The greater the number of banks that take the preparatory steps necessary to use the new possibility of obtaining liquidity, the greater will be the central bank’s room for manoeuvre in time of need, Schlegel said.
The SNB said it expected banks involved in mortgage lending to take part in the initiative, which it sees as providing broad-based support to financial stability and the resilience of the banking system.
Earlier this month, Switzerland’s central bank was criticised for being too restrictive in a report by a group of experts, including bankers and academics, formed in the wake of Credit Suisse’s collapse.
Schlegel said, by expanding the ways the country’s banks can tap liquidity, the central bank was not lowering its standards.
“Mortgages are a very good security and we have already accepted them as collateral with other banking groups, with systemically important banks,” he said.
(Reporting by Noele IllienEditing by Tomasz Janowski)
