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UBS has opposed Swiss authorities plans to tighten financial institution capital guidelines after the collapse of Credit score Suisse, warning the reforms would elevate its prices sharply, damage the nation’s competitiveness and weigh on the broader financial system.
In its formal response to a authorities session on the reform bundle, UBS stated the reform bundle – centred on forcing the financial institution to totally capitalise its international subsidiaries – is “extreme, disproportionate, not internationally aligned and never focused”.
The financial institution estimated the plan would enhance its capital wants by about $23–24bn, primarily via further Widespread Fairness Tier 1 capital.
UBS stated the extra necessities would carry its annual prices by round $1.7bn and “jeopardise the continuation of the profitable UBS enterprise mannequin”.
It argued the proposals are based mostly on “excessive” assumptions and would make Switzerland uncompetitive in contrast with different monetary centres, noting that “the [government’s] proposals would considerably enhance the necessities and would distinction sharply with developments in Europe and the US, the place deregulation initiatives have already been introduced”.
The financial institution stated regulatory uncertainty for the reason that announcement of an replace to Switzerland’s regime in April 2024 has already hit traders.
UBS calculated that its market worth underperformed European and US banking friends by 27% between April 2024 and the tip of final yr, amounting to about $37bn in misplaced shareholder worth, along with roughly $14bn in prices tied to integrating Credit score Suisse.
UBS argued that various choices “which might have an equal impact at decrease price” had “not been given ample consideration”, including: “The [government] has rejected these [alternative proposals] as a result of they don’t meet the intense goal of zero threat tolerance.”
The financial institution known as for Extra Tier 1 devices and bail-in bonds to be counted in the direction of assembly stricter necessities and for AT1s to be handled in keeping with apply within the European Union and United Kingdom.
Swiss authorities outlined the capital reforms in June as a part of efforts to keep away from one other Credit score Suisse-style failure and to defend taxpayers, after UBS acquired its former rival in a state-orchestrated rescue in 2023.
The reform bundle additionally consists of measures to strengthen the standard of UBS’s capital base and stays topic to parliamentary approval, with potential revisions nonetheless doable.
The Swiss Bankers Affiliation (SBA) backed UBS’s considerations, arguing the proposals are disproportionate, misaligned with world requirements and threat undermining Switzerland’s standing as a monetary centre with out materially enhancing stability.
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