Stoxx 600, FTSE, SNB, BOE decisions

The Swiss National Bank on Thursday backed the Swiss government’s proposals to strengthen the health of the country’s financial system against eventual crises, including by imposing additional capital requirements on banking giant UBS.

Earlier this month, Swiss authorities proposed a new requirement for UBS — Switzerland’s largest systemic lender — to hold an additional $26 billion in core capital to allay possible shocks to the Swiss financial system, in the event of the bank’s collapse. UBS has been fighting such measures since its government-aided takeover of stricken domestic peer Credit Suisse in 2023, citing the erosion of its competitiveness.

In its Financial Stability Report 2025 out Thursday, the SNB acknowledged year-on-year improvements in the profitability of the Swiss banking sector led by UBS last year. It nevertheless noted integration costs linked to the Credit Suisse merger still weighed on the lender’s profitability and that “standalone capital ratios of the parent bank overestimate its true resilience.”

“It is important to address this regulatory weakness and introduce further policy measures as proposed by the Federal Council,” the SNB said, “also because the loss potential for UBS under the various SNB stress scenarios remains substantial.”

The central bank endorsed the Swiss government’s proposal for a parent bank’s participation in its foreign subsidiaries to be fully deducted from its Common Equity Tier 1 (CET-1) capital, which is typically designed to cover losses immediately as they occur.

“From a financial stability perspective, this approach is the best solution to ensure full capital backing of the foreign participations and thus robust capitalisation of the parent bank,” the SNB said, acknowledging that UBS already meets the “too big to fail” capital requirements applicable as of 2030.

— Ruxandra Iordache

The British pound is 0.22% lower against the U.S. dollar at $1.339 at 7:25 a.m. in London, and flat at a euro rate of around 0.855, ahead of the Bank of England rate decision at midday.

A rate hold is widely expected with figures on Wednesday confirming inflation remains well above the BOE’s 2% target, coming in at 3.4% in May.

The Federal Reserve also kept rates on hold at its meeting yesterday, and trimmed its projection for reductions in the coming years. The greenback has been given an even bigger boost over the last week by a safe haven flight amid fears over escalating conflict in the Middle East.

ING FX Strategist Francesco Pesole, meanwhile, in a Tuesday note, pointed to signs of the euro strengthening against sterling, unless the BOE surprises with a more hawkish-than-expected message today. Higher interest rates tend to support a domestic currency.

“Geopolitical risks generally harm the pound more than the euro, and the data flow has been GBP-negative of late,” Pesole said.

— Jenni Reid

It’s a big day for central bank action on Thursday, with monetary policy decisions coming from Turkey, Norway, Switzerland and Britain.

The central banks of the latter two countries will be closely watched, with the Swiss National Bank likely to lower its interest rate to zero this week. The Bank of England is expected to hold interest rates, but investors will be waiting to see how policymakers voted and for any guidance on the rate cut trajectory, with most analysts expecting a cut in August.

There are no other major earnings or data releases in Europe. U.S. markets are closed for the Juneteenth holiday on Thursday.

— Holly Ellyatt

Good morning from London, and welcome to CNBC’s live blog covering European financial markets and the latest regional and global business news, data and earnings.

Futures data from IG suggests a choppy start for European markets, with London’s FTSE looking set to open 22 points higher at 8,862, Germany’s DAX down 88 points at 23,253, France’s CAC 40 lower 32 points at 7,619 and Italy’s FTSE MIB dropping 105 points to 39,321.

Global market sentiment is becoming more skittish over the conflict between Iran and Israel and the possibility of further U.S. involvement.

On Wednesday evening, U.S. President Donald Trump convened his national security advisors in the White House Situation Room for the second time in two days. Earlier, Trump said…