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swiss banking reform calls for increased equity capital after credit suisse collapse

The Swiss National Council is set to decide on a proposed salary cap for bank executives, primarily targeting UBS's CEO Sergio Ermotti, whose salary for 2024 is CHF 14.9 million. While public frustration over high salaries grows, the focus should shift to enhancing capital requirements for banks, especially following the Credit Suisse collapse, which highlighted the need for stronger equity buffers. UBS faces potential additional capital requirements of up to $25 billion, yet the Federal Council's reluctance to enforce stricter regulations risks undermining the stability of Switzerland's banking sector.

challenges of bank failures and the need for european banking union

Incompetence and scandals led to the downfall of Credit Suisse (CS), while UBS's focus on wealth management has made it more resilient. However, UBS is now deemed "too big to save," raising concerns about its liabilities and the effectiveness of cross-border bank mergers without clear resolution rules. Banking expert Martin Hellwig warns that higher capital requirements are essential for stability, yet the influence of banks has hindered significant reforms since the 2008 crisis.
10:03 01.11.2024
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