Banking Crisis
UBS Chief Executive Urges Switzerland Against Overly Heavy Capital Rules – Report

While he wants Switzerland to avoid hampering banks with rules that make them uncompetitive, the CEO also said the country's regulatory backdrop can be a useful differentiator.
The chief executive of UBS
says the bank opposes the Swiss government’s proposals to make
the Zurich-listed lender hold substantially more capital, arguing
that the design of new rules will hurt competitiveness,
Bloomberg has reported.
The requirement to maintain 100 per cent backing of its
foreign units would be “an extreme overreaction that will not
really help foster Switzerland as a leading financial centre,”
Sergio Ermotti (pictured) was quoted telling the news service in
an interview at the World Economic Forum in Davos
yesterday.
UBS is scheduled to issue fourth-quarter and full-year 2024
financial results on 4 February.
“We are trying to present the case for why it’s totally
unnecessary and incredibly penalising to say that a foreign
participation is worth nothing on your balance sheet,” Ermotti
said. He added that UBS welcomes most of the government’s other
proposals, which include strengthening the national regulator,
FINMA.
Switzerland is trying to reform its financial regulation and
plans are expected to be completed in the coming months, the
report noted. As
reported in April last year, the Federal Council wants
systemically important Swiss banks – such as UBS – to hold
significantly more capital against their foreign units. UBS,
Raiffeisen Group, Zürcher Kantonalbank and PostFinance are deemed
systemically important lenders.
The “shotgun wedding” in March 2023 of UBS and Credit Suisse,
undertaken at the behest of Swiss authorities because of a
dramatic slide in Credit Suisse’s fortunes amid a number of
scandals and missteps, means that UBS is now the country’s only
universal bank. Ironically, during the 2008 financial crisis, it
was UBS that had to be bailed out. At the time, there was
much commentary about avoiding creating banks that were so large
that they would be deemed “too big to fail.”
Ermotti said that the Swiss regulatory backdrop does help UBS to
stand apart from its competitors. He said that talk in the Swiss
media of moving the bank elsewhere, such as the US, was “not a
topic” for him at this time.