Swiss regulator to enhance oversight of UBS amid banking reforms

Switzerland's financial regulator, FINMA, has announced plans to enhance its oversight of UBS, the country's largest bank, as part of an effort to strengthen the banking sector's resilience.

Background

The move comes after the collapse of Credit Suisse in 2023, which raised concerns about systemic risks in the financial system. The Swiss government has proposed regulatory reforms to bolster the banking sector's robustness, including granting additional powers to FINMA.

Supervisory Approach

FINMA aims to refine its supervisory approach and ensure that UBS and other systemically important banks adhere to higher governance and risk management standards. The regulator emphasizes the need for ongoing reviews of its supervisory methods, particularly in light of UBS's expanded size and influence.

Enhancing Emergency and Recovery Plans

FINMA has mandated that UBS enhance its emergency and recovery plans to ensure that it can be effectively wound down or sold off without posing a risk to financial stability. The regulator also advocates for stronger regulatory powers, including the ability to publicly name and shame banks that violate its rules.

Regulatory Reforms

The Swiss government is currently deliberating the extent of these new regulations, and an announcement regarding the supervisory instruments available to FINMA is expected in the first half of 2025. The ongoing review of UBS's supervisory framework is crucial for creating a more resilient banking system in Switzerland.

Implications and Monitoring

The developments in Swiss banking regulation are closely monitored by financial institutions and investors, as they may set a precedent for regulatory practices in other jurisdictions. The challenge for regulators is to strike a balance between fostering a competitive banking environment and ensuring systemic stability in an interconnected global financial landscape.

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