September 20, 2018 / 11:32 AM / 8 months ago

REFILE-Swiss central bank flags concern about government's PostFinance plans

(Refiles to add dropped word 'bank' in headline)

ZURICH, Sept 20 (Reuters) - The Swiss National Bank expressed concern on Thursday about the government's plans to let PostFinance, the banking arm of the country's postal service, compete in the mortgage and lending market.

"We are in a situation where we have enough mortgage coverage with loans. And at the same time, we have a high price level for real estate," SNB Chairman Thomas Jordan told broadcaster SRF in an interview.

"This means that the entry of a very large bank into this market must be very cautious so that the risks to financial stability are not unnecessarily increased."

The government wants to sell a minority stake in PostFinance as part the plan, details of which still need to be worked out and which faces some opposition in parliament.

It would ease pressure on the systemically important bank at a time when negative Swiss interest rates are weighing on its results.

Jordan was speaking after the SNB again warned that Swiss mortgage and real estate markets could tumble, pointing to continued increases in banks' mortgage lending and a rise in housing prices amidst growing vacancies as persistent imbalances. (Reporting by Angelika Gruber and Michael Shields, editing by Pritha Sarkar)

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