Banking Crisis
Swiss Bankers Association Fires Broadside At Proposed Regulations

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.”