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UBS faces tougher regulatory challenges in Switzerland under President Karin Keller-Sutter, contrasting sharply with the deregulatory environment in the US under Trump. Following the collapse of Credit Suisse, Swiss authorities aim to increase UBS's capital strength significantly, potentially costing up to $25bn. As negotiations unfold, the bank may seek compromises to align with global standards while navigating its precarious position.
UBS faces backlash after CEO Ermotti misrepresented a study showing the bank saves $2.9 billion annually due to state guarantees, claiming the figures were outdated. Despite clarifications, the actual model used in the study is from 2002, not 1974, raising concerns about transparency and accountability. Meanwhile, UBS continues to benefit significantly, allowing its executives to indulge in luxury shopping.
UBS ranks as the 9th largest non-US investor in nuclear weapons producers, having invested nearly $2.5 billion in shares and bonds, alongside over $3 billion in loans. Despite a decline in financial institutions involved in nuclear weapon financing, total investments in major manufacturers rose to $513 billion. The International Campaign to Abolish Nuclear Weapons highlights the impact of the Treaty on the Prohibition of Nuclear Weapons, which Switzerland has yet to join.
Markus Ronner from UBS addresses the Federal Council's proposals to increase capital requirements for banks following UBS's takeover of Credit Suisse. As the consultation process is set to begin in May, concerns arise about potential impacts on loan interest rates and the possibility of UBS relocating abroad. The discussion is part of a broader examination of financial policies, including insights from monetary economist Fabio Canetg on central banks, inflation, and economic strategies in Switzerland.
UBS faces a conflict over capital requirements as Finance Minister Karin Keller-Sutter demands an increase of CHF 15 to 25 billion by 2030. CEO Sergio Ermotti counters with plans for a CHF 3 billion share buyback and a 10% dividend increase, despite a nearly CHF 7 billion drop in equity capital last year. The SNB and Finma support measures for greater equity in subsidiaries to enhance financial stability, while Ermotti criticizes the demands as excessive.
A power struggle is unfolding at UBS between CEO Sergio Ermotti and Finance Minister Karin Keller-Sutter over capital requirements, with the latter demanding an increase of CHF 15-25 billion by 2030. UBS plans a CHF 3 billion share buyback and a 10% dividend increase, countering calls for more equity amid concerns about financial stability. The debate intensifies as regulators push for stricter capital adequacy rules, while Ermotti warns that such demands could hinder the bank's operations and economic contributions.
Ueli Maurer reflects on the downfall of Credit Suisse, emphasizing that the bank resisted state intervention despite severe liquidity issues. He critiques the limitations of FINMA and the Swiss National Bank, noting that a lack of legal frameworks hindered timely action, ultimately leading to a loss of trust in CS. Maurer argues that the state should not rescue mismanaged companies, highlighting the need for better oversight and intervention mechanisms in the banking sector.
PWC is assisting Swiss Radio and Television (SRF) with cost-cutting measures, which include the reduction of 50 full-time positions. Meanwhile, tensions rise between UBS and Finance Minister Karin Keller-Sutter over capital adequacy requirements, as UBS plans a share buyback despite falling equity. Additionally, the head of the Swiss-American Chamber of Commerce advocates for Switzerland to withdraw from the OECD minimum tax to foster tax dialogue with the USA.
Stefan Walter, the new director of Finma, criticized the reliance on external auditors, suggesting that Switzerland amend its banking law to allow for more direct inspections by the supervisory authority. He highlighted the inherent conflicts of interest in the current dualistic system and called for the deletion of Article 23 of the Banking Act. Despite his concerns, past inquiries found no legal breaches by auditors, raising questions about the necessity of increasing Finma's staffing for audit functions.
Goldman Sachs analyst Chris Hallam has raised the price target for UBS shares to 35.60 francs, reflecting strong confidence despite recent profit-taking after the bank's latest report. UBS is successfully integrating Credit Suisse, with a projected 2024 pre-tax profit of $8.8 billion and plans for increased dividends and share buybacks, contingent on capital regulations. However, potential tightening of capital requirements could necessitate an additional $15 to $25 billion in capital, which may impact shareholder returns.
Karin Keller-Sutter
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