banks push back against federal council's regulatory reforms after credit suisse crisis

The aftermath of the Credit Suisse crisis has sparked a debate over the future regulatory landscape for UBS and the broader Swiss banking sector.

Proposed Reforms

The Federal Council has proposed reforms to tighten capital requirements and enhance supervisory powers, but these proposals have faced opposition from the Bankers Association.

The proposed measures include:

  • Increased equity capital backing for foreign participations
  • Expanded authority for the Swiss Financial Market Supervisory Authority (Finma)
  • A more cautious approach to asset valuation

Capital Implications

UBS may need to raise additional equity capital to meet the anticipated requirements. The Bankers Association has called for a comprehensive evaluation of the capital implications of the proposed changes.

They acknowledge the necessity for regulatory action but express concerns about the potential impact on UBS's global competitiveness.

Expansion of Finma's Supervisory Powers

The proposed expansion of Finma's supervisory powers has sparked controversy, with the Bankers Association supporting clearer accountability for senior bank managers but opposing fines and earlier interventions during crises.

The industry is skeptical about additional resources for Finma and the need to balance oversight with operational realities.

Crisis Preparedness

The establishment of a credible emergency regime for UBS in the event of financial distress is in doubt, and the specifics of crisis planning measures remain unclear.

The Bankers Association welcomes the government's commitment to enhancing crisis preparedness but emphasizes the need to reduce the perceived state guarantee for UBS.

State Liquidity Guarantee

The government has proposed a state liquidity guarantee for systemically important banks, but the banking sector has expressed resistance to paying insurance premiums for this safety net.

Future of Banking Regulation

The regulatory landscape for Swiss banks is expected to undergo significant changes, and negotiations between the government and the banking sector will shape the future of banking regulation in Switzerland and its impact on the global financial system.

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