The Swiss government detailed its emergency «bazooka» to shore up the domestic economy with cheap loans, while regulators said they will ease requirements for lenders.
The Swiss government detailed specifics of a 42 billion Swiss francs ($42 billion) emergency program to keep the domestic economy afloat during the coronavirus pandemic. This includes fully backing credit by Swiss banks, while the central bank and Swiss financial regulator will ease capital requirements on lenders for now.
Specifically, the Swiss government said in a statement on Wednesday it will fully guarantee loans of up to 500,000 francs at zero percent interest. Bridging financing of more than 500,000 francs will be backed to 85 percent by the government and the remainder by the lender at 0.5 percent interest.
No-Fuss Loans
The government said it wants loans to small businesses «paid out quickly and with the minimum of bureaucracy.» Separately, Switzerland's central bank said it will set up a coronavirus refinancing facility to ensure companies have liquidity.
«There is no upper limit on the amounts available under the coronavirus refinancing facility, and drawdowns can be made at any time,» the Swiss National Bank said in its statement. It will also temporarily ease an additional buffer required of mortgage lenders to zero, in agreement with Swiss financial overseer Finma.
Breather on Capital Rules
Finma is giving banks a break on leverage ratio requirements for the next three months, it said in a separate statement. It says this frees up roughly 20 billion francs in capital which can be used for lending.
The measures deliver on a Swiss government «bazooka» last week to shore up the domestic economy, stricken by the pandemic. The government will allow companies with turnover of less than 500 million francs to apply, from tomorrow, for up to 10 percent of their annual revenue. Loans are capped at 20 million francs per applicant.
