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UBS faces a critical debate over its capital requirements following its takeover of Credit Suisse, with the bank arguing it is well-capitalized while economists demand 100% backing for foreign subsidiaries. The potential cost of this requirement could reach CHF 22 billion, impacting dividends and share buybacks, which UBS warns would diminish its attractiveness to investors and competitiveness. The discussion highlights the tension between ensuring financial stability and the economic implications for the bank and Swiss economy.
Former Swiss banking supervisor Daniel Zuberbühler advocates for higher capital requirements for UBS, suggesting a leverage ratio of 10 percent, up from the planned 5.5 percent by 2026. He criticizes the current proposals from UBS and the Swiss Bankers Association as insufficient and expresses skepticism about UBS's resolvability, highlighting the risks of winding up a complex global bank.
Daniel Zuberbühler, former Director of the Swiss Federal Banking Commission, advocates for higher capital requirements for UBS to reduce the risk of the bank's potential winding up. He suggests an unweighted capital ratio of 10% and increased surcharges for size and market share, arguing that current measures are insufficient. Zuberbühler expresses skepticism about the feasibility of resolving a complex institution like UBS, despite the availability of bail-in bonds.
UBS's capital adequacy must be significantly enhanced to mitigate the risks of a potential liquidation, as current resolution plans are deemed unreliable. Despite proposals for increased leverage ratios and surcharges to curb growth, UBS argues that its bail-in bonds would protect stakeholders during a crisis, though doubts persist about the feasibility of resolving such a complex institution without state intervention. The Federal Council's report highlights the uncertainties surrounding UBS's resolution, suggesting that a state rescue may be the only viable option to maintain Switzerland's status as a global financial center.
The Swiss Bankers Association (SBA) has expressed concerns over the Federal Council's proposed measures for banking stability, particularly regarding the too-big-to-fail (TBTF) issue, advocating for international coordination on capital adequacy and opposing additional powers for Finma. The SBA supports the introduction of a Public Liquidity Backstop (PLB) but rejects the idea of banks paying an insurance premium for it, emphasizing the need for proportionality in regulation to maintain competitiveness. The association awaits the Parliamentary Commission of Inquiry report to finalize its stance on the proposed measures.
Manuel Ammann
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The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
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