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UBS faces potential restrictions on its investment banking activities as Swiss authorities seek to enhance financial stability following the Credit Suisse crisis. The Swiss People's Party proposes capping investment banking at 30% of total business to reduce capital requirements, which UBS argues could harm its competitiveness. The bank, already under pressure to raise $40 billion in capital, is considering relocating if regulations become excessively burdensome.
The Swiss Financial Market Supervisory Authority (FINMA) faces criticism for its handling of the Credit Suisse (CS) crisis, with a parliamentary inquiry revealing that CS management largely bears the blame for its risky strategies and scandals. Politicians are calling for increased regulation and capital requirements for UBS, which has taken over CS, amid concerns that the bank's high executive salaries and bonuses could lead to similar failures. The debate highlights the tension between maintaining a competitive banking environment and ensuring adequate oversight to prevent future crises.
In a recent debate, politicians discussed the need for increased regulation of major banks following the Credit Suisse crisis. SP Co-President Cédric Wermuth advocated for a salary cap of CHF 5 million for bank executives, arguing that state support justifies government intervention. However, UBS's Markus Ronner and SVP's Thomas Matter opposed the cap, emphasizing the importance of maintaining competitiveness and shareholder rights in the banking sector.
The SVP supports limiting investment banking at UBS to reduce capital requirements, proposing that it should not exceed 30% of total business. This approach aims to mitigate risks without demanding full capital backing for foreign subsidiaries, despite skepticism from experts about its effectiveness.
Markus Ronner, UBS's Group Chief Compliance and Governance Officer, is set to make a rare television appearance on Swiss Arena, facing left-wing critics including Cédric Wermuth and Franziska Ryser. Known for his calm demeanor and extensive knowledge of banking regulations, Ronner's participation marks a significant moment, as top bank executives have largely avoided public scrutiny since the financial crisis. His background in compliance and governance positions him well to address the challenges posed by critics.
The Swiss People's Party plans to propose limiting UBS's investment banking activities to 30% of total assets as part of a regulatory overhaul aimed at reducing risks in the banking sector. This move comes amid discussions on requiring UBS to fully capitalize its foreign units following its acquisition of Credit Suisse. Critics argue that merely capping investment banking activities may not sufficiently enhance the safety of the banking landscape.
The Swiss People's Party (SVP) plans to propose capping UBS's investment banking activities at 30% of its total business as part of a regulatory overhaul aimed at reducing risk in the financial sector. This move is contingent on the government requiring UBS to fully capitalize its foreign units. UBS, which has faced increased regulation since acquiring Credit Suisse, supports efforts to enhance financial stability but warns against imposing excessive burdens that could disadvantage the bank and Switzerland.
A proposal from Switzerland's Swiss People's Party aims to cap UBS's investment banking activities at 30% of total operations to enhance capital adequacy and reduce risks. This comes amid discussions on stricter regulations following UBS's acquisition of Credit Suisse, with authorities advocating for full capitalization of its foreign units. Critics argue that merely limiting investment banking won't sufficiently address potential risks.
The Swiss People's Party is proposing to limit UBS's investment banking activities to 30% of its total business to mitigate risks to taxpayers and avoid stringent capital requirements. This comes as the Ministry of Finance prepares new regulations to enhance financial stability following the Credit Suisse collapse. UBS, which has already scaled back its investment banking, argues it is well-capitalized but fears competitive disadvantages from potential new capital demands.
The Swiss Parliament has approved measures for systemically important banks, particularly UBS, following the Credit Suisse crisis. While there is broad support for the proposals, significant differences remain between political factions regarding stricter capital requirements and UBS's recent decision to delay its net zero target. Further legislative actions are anticipated as the need for tighter regulations persists.
Thomas Matter
People
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