1 week ago
UBS Chief Warns Harsh Capital Rules Could Hurt Switzerland Vote
UBS is Switzerland’s largest bank after buying Credit Suisse during its 2023 crisis.
Swiss lawmakers are deciding how much extra money UBS must keep in reserve.
The government wants stricter rules to help protect taxpayers if another bank crisis happens.
It says the proposed rules could require UBS to add $20 billion in capital.
UBS agrees that some rules may need to become stricter.
However, CEO Sergio Ermotti says requiring too much Common Equity Tier 1 capital would be too expensive.
He warns that higher costs could affect customers and employees, not only shareholders.
Lawmakers are expected to vote on the rules in Switzerland’s upper house on Wednesday.
UBS CEO Sergio Ermotti urged lawmakers not to impose excessively strict capital requirements on the bank.
Switzerland’s government says tougher rules are needed to protect taxpayers after Credit Suisse’s 2023 collapse.
Government proposals would require UBS to hold an additional $20 billion in capital.
UBS says a compromise using 50% Additional Tier 1 capital would require $13 billion and remain doable.
Ermotti said a proposal requiring 90% or 100% Common Equity Tier 1 capital would go too far.
- Who
- UBS CEO Sergio Ermotti, Swiss lawmakers, the Swiss government, and financial authorities.
- What
- Switzerland is considering new capital requirements for UBS after its takeover of Credit Suisse.
- Where
- Switzerland, including the country’s upper house of parliament.
- When
- The interview was published on Sunday, ahead of an upper-house vote scheduled for Wednesday; the article is dated Sept. 20.
- Why
- The rules are being proposed to protect taxpayers from another banking crisis following Credit Suisse’s 2023 collapse.
UBS Position
Government And Lawmakers
How strict the capital rules should be
UBS Position
UBS says some tightening is acceptable but argues that requiring 90% or 100% Common Equity Tier 1 capital to back foreign units is excessive.
Government And Lawmakers
The government says tougher regulation is necessary to protect taxpayers from another banking crisis, while some lawmakers are considering the 90% option.
Who would bear the costs
UBS Position
Sergio Ermotti says higher capital costs would affect customers and employees as well as shareholders, and UBS Chairman Colm Kelleher warned the bank might reconsider its future in Switzerland if it cannot compete.
Government And Lawmakers
The government’s proposals prioritize stronger protection against future crises and would require UBS to hold an additional $20 billion in capital.
Responsibility for Credit Suisse’s collapse
UBS Position
Ermotti said Switzerland’s financial regulator and central bank bore some responsibility for Credit Suisse’s demise.
Government And Lawmakers
FINMA and the Swiss National Bank did not immediately respond to requests for comment.
Key facts
- Bank involved
- UBS
- Acquired bank
- Credit Suisse, taken over by UBS during an emergency takeover in 2023
- Proposed additional capital
- $20 billion under the Swiss government’s proposals
- UBS compromise estimate
- $13 billion in Additional Tier 1 capital
- Existing compromise
- Half of the foreign-units requirement could be met with Additional Tier 1 capital
- Alternative under debate
- A proposal requiring 90% Common Equity Tier 1 capital for foreign units
- Scheduled decision
- Switzerland’s upper house is due to vote on Wednesday
Quotes
Sergio Ermotti
Chief Executive of UBS
“We can live with a black eye, but two black eyes and a broken nose is too much. Yet that's exactly what the demand for capital backing of 90% or 100% comes down to.”
livemint.com
“It's a mistake to believe the additional costs will only be borne by shareholders. Customers and employees will be affected, too.”
livemint.com
Sources
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