UBS is currently facing challenges in reassessing its contingency plans for potential restructuring and liquidation following its acquisition of Credit Suisse.
The integration of Credit Suisse has created hurdles in evaluating UBS's capacity for effective restructuring and winding down operations, leading to the suspension of the annual approval process for UBS's stabilization and emergency plans by the Financial Market Authority (Finma).
UBS's ability to be recapitalized and wound down if necessary is acknowledged by Finma, but the integration process requires standardization of group structures, processes, and IT platforms. Until these systems are fully automated, UBS is relying on manual data aggregation.
In addition to the existing resolution strategy, Finma has emphasized the need for additional strategies that would allow UBS to exit the market by selling or shutting down specific business units or even the entire bank.
Legislative changes will be necessary to facilitate these options, including the introduction of a "public liquidity backstop" (PLB) to ensure adequate liquidity support during a resolution scenario.
The integration of Credit Suisse's Swiss operations into UBS Switzerland will impact the bank's emergency planning, requiring revisions to liquidity planning and refinancing strategies.
UBS remains committed to meeting the necessary requirements for a potential wind-down, but the ongoing integration process will require diligent oversight and strategic planning.
As a global systemically important bank, UBS is subject to stringent regulatory oversight and must fulfill specific requirements for crisis prevention.
The integration of Credit Suisse adds complexity to these requirements, necessitating compliance and adaptability.
UBS's ability to adapt to these challenges will be crucial in ensuring stability and resilience.