The Swiss Bankers Association also weighed in against proposed Swiss government reforms that have already drawn fire from the country's biggest bank, UBS, as putting Swiss banks at a major competitive disadvantage.

Switzerland’s banking industry argues that proposed regulatory reforms – already criticised by UBS – will put the Alpine state’s banks at a competitive disadvantage versus their peers.

“Some of the measures are misguided and threaten to weaken the financial centre and the Swiss economy as a whole in an environment of escalating geopolitical rivalries and increasing international deregulation,” the Swiss Bankers Association has said.  

“This is to be avoided at all costs. The proposed tightening of capital requirements for UBS, which is even more drastic than in the Federal Council’s report from 2024, is especially problematic. The new requirements are not aligned with any international standard and would become massively more onerous than those in other financial centres,” it continued. “The regulatory weakness that contributed to the downfall of Credit Suisse lay not in insufficient capital adequacy requirements but in far-reaching exemptions from those requirements and in overinflated asset valuations. Abolishing those exemptions and using appropriate, reliable valuation methods would thus be a better response.” 

Swiss lawmakers are trying to draw a line under the saga that saw UBS buy rival Credit Suisse in an emergency deal, back in 2023. The acquisition left Switzerland with one universal bank. Credit Suisse had been hit by a run of scandals, suffering a slide in its share price. For a country proud of its reputation for financial solidity, and still adjusting to the end of bank secrecy (on international clients) a decade earlier, the Credit Suisse collapse was a blow. Thousands of jobs have been lost. 

SBA statement
“The Federal Council has learned some right lessons from the Credit Suisse (CS) crisis, but the regulatory package has been made even stricter and is overloaded and, in some respects, detrimental to Switzerland,” the SBA said.

“With the proposals published today [6 June], the Federal Council is acting on important lessons learned from the Credit Suisse crisis that will lead to further strengthening of the Swiss financial centre’s stability,” it continued. 

The SBA said the Credit Suisse crisis “exposed weaknesses in the provision of liquidity.” It said that extending and destigmatising provision of liquidity by the Swiss National Bank (SNB) for all banks and, and the proposed introduction of a public liquidity backstop for systemically important banks, will close the gaps in the existing safety net.

Credit Suisse, the SBA said, collapsed “due to years of mismanagement and the resulting loss of confidence.”

“Establishing clear management responsibilities in a targeted manner through a senior managers regime and enshrining remuneration principles in law could prevent false incentives and abuse in future,” it said.

The SBA said the reform package was “overloaded and goes too far,” however.

“Compared with the report published by the Federal Council in April 2024, the number of new regulations has grown from 22 to 28. The applicability of measures concerning corporate governance has also been extended. We see no need for any changes in this area for most banks,” it said. “In response to a crisis suffered by a single bank as a result of its own actions, a wave of regulation is set to be imposed on all banks. Many of the measures put forward have little to do with the causes of Credit Suisse’s demise.”