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Swiss bankers have expressed concerns over government plans for stricter capital requirements for UBS and other major banks, arguing that existing regulations are sufficient and that new measures could harm the competitiveness of the financial sector. The Swiss Bankers Association supports targeted stability improvements but warns that proposed changes, including increased capital for foreign subsidiaries, need careful calibration. UBS has indicated that additional capital requirements could range from $15 billion to $25 billion, with implementation aimed for early 2025.
UBS faces a dilemma as U.S. investment banking thrives, with American banks reporting record profits while UBS maintains a cautious approach to high-risk deals. Although UBS excels in wealth management across Asia and Europe, it earns less from investment banking compared to its U.S. counterparts. The booming sector may reignite discussions on UBS's investment banking strategy, especially following its acquisition of Credit Suisse, which has brought new expertise to the firm.
Switzerland faces a legal challenge in New York regarding the collapse of Credit Suisse, as AT1 bondholders seek restitution for their losses. The trial has been delayed due to the complex legal questions surrounding Switzerland's ability to be sued in this context.
FINMA is mandating UBS to revise its emergency plan to enhance crisis preparedness and ensure financial stability without relying on taxpayer funds. The authority emphasizes the need for more crisis management options and a robust resolution strategy, especially following the Credit Suisse crisis, as UBS integrates CS and faces new challenges.
UBS Chairman Colm Kelleher has sharply criticized Switzerland's banking regulator, Finma, for its failure to act on warning signs regarding Credit Suisse, which he claims has been unviable since 2015. He argues that while Finma issued letters, it did not take decisive action, allowing significant risks and misconduct to persist, ultimately leading to a costly emergency rescue. Kelleher emphasizes that the responsibility for the crisis lies primarily with Credit Suisse's management and board, while questioning why Finma did not intervene more effectively despite its expanded powers.
UBS emphasizes its low-risk profile and robust wealth management focus, asserting a credible liquidation and restructuring plan is in place. CEO Sergio Ermotti's controversial salary reflects the challenges of attracting top talent in banking, while concerns over Credit Suisse's management and regulatory oversight highlight systemic issues in the industry. The introduction of a Public Liquidity Backstop is deemed essential for enhancing Switzerland's banking stability.
UBS Chairman Colm Kelleher defended CEO Sergio Ermotti's salary, emphasizing that it reflects the challenging circumstances he faced compared to his predecessor. Kelleher expressed disappointment over public backlash and criticized Finma for its lack of assertiveness during Credit Suisse's downfall, highlighting the need for proactive regulatory measures. He also stated that increasing capital requirements could jeopardize Switzerland's status as a key financial center, but affirmed UBS's commitment to remaining in the country.
UBS emphasizes its robust restructuring plan and low-risk focus on wealth management, asserting its stability despite public concerns over CEO Sergio Ermotti's remuneration. The bank's capital buffers and liquidity measures are designed to ensure it can withstand crises without taxpayer support, while addressing industry feedback on credit conditions.
UBS Chair Colm Kelleher cautioned that proposed increases in capital requirements for major Swiss banks could undermine Switzerland's status as a financial hub. While he supports most recommendations from the government, he opposes stricter capital rules, arguing they would harm competitiveness and customer pricing. Kelleher emphasized UBS's strong capital position and commitment to Switzerland, warning that excessive requirements could signal a shift away from being a relevant international financial center.
Colm Kelleher
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