The capital requirements for UBS will depend on the bank's resolvability, as the Swiss government considers new stability measures.
These measures are part of a broader initiative aimed at addressing vulnerabilities exposed by the collapse of Credit Suisse.
UBS, which acquired Credit Suisse after its failure, is awaiting the finalization of regulations stemming from the Swiss government's "too big to fail" proposals.
The capitalization of inadequately capitalized subsidiaries of Credit Suisse in the United States and Britain is under review, with discussions ongoing about the appropriate level of capitalization for foreign units in the future.
The decision will depend on UBS's overall resolvability and must consider a comprehensive package of capital requirements, including progressive components that increase with the bank's size and results from stress tests.
The Finance Minister acknowledges the need to balance competitiveness and stability in the financial sector.
UBS has expressed concerns that higher capital requirements could negatively impact its business operations.
The government is working to align capital requirements with those of other countries, where banks often maintain capital levels exceeding 60%.
The importance of liquidity in the event of another financial crisis is emphasized, and the government is taking a proactive approach to safeguarding the economy against future shocks.
The discussion around capital requirements also intersects with the issue of executive compensation.
The Finance Minister does not believe the authorities should directly intervene in setting salaries but supports measures that would allow for compensation clawbacks.
A cap on bankers' salaries could gain traction in a referendum.
The possibility of granting the financial market regulator, FINMA, the authority to impose fines on banks is not dismissed.
This potential shift in regulatory power reflects the government's commitment to enhancing accountability within the banking sector.
The implications of these capital requirements and oversight measures will be significant for UBS and the Swiss banking sector.
The emphasis on resolvability and adequate capitalization reflects a growing recognition of the interconnectedness of global financial systems and the need for robust safeguards against systemic risks.
The ongoing discussions and potential regulatory changes will shape the future of banking in Switzerland, particularly as UBS adapts to its expanded role following the acquisition of Credit Suisse.
The balance between maintaining a competitive edge and ensuring financial stability will be a critical focus for both the government and the banking sector in the coming months.
Stakeholders will closely monitor the outcomes of the proposed regulations and their impact on UBS's operations and the overall health of the Swiss financial system.
The government's proactive stance on these issues signals a commitment to fostering a resilient banking environment that can withstand future challenges while promoting sustainable growth.