No decisions yet on stricter capital adequacy rules for UBS
Keystone-SDA
The Swiss Senate has not yet taken any decisions on the future capital requirement rules for systemically important large banks with foreign holdings. Due to time constraints, it was unable to conclude its deliberations on the bill on Thursday. The debate will continue next week.
The regulation, which would currently affect, in practice, only the major bank UBS, is controversial. Accordingly, the members of the Senate took time to exchange their arguments. So much time, in fact, that it was not yet possible to vote on the minority motions tabled.
The federal government wants banks to be required to underpin their subsidiaries abroad with 100% hard core capital (CET1 capital). UBS is vehemently opposed to this. According to the bank, it would be obliged to hold around $22 billion (CHF18 billion) in additional core capital.
+ UBS global units must be backed by ‘hard capital’: SNB
However, the majority of the Economic Affairs Committee (WAK-S) of the Senate has now put forward an alternative proposal to tighten the “too big to fail” framework. On the one hand, the WAK-S is proposing that 50% of overseas holdings be backed by hard core capital, rather than the current 45%.
For the remaining 50%, additional core capital in the form of AT1 bonds (Additional Tier 1) should be permitted. The current rule is: 45% core capital plus 17% in AT1 bonds. UBS also rejects this proposal.
A sizeable minority – in line with the government’s approach – would like to see a 90% capital requirement for foreign holdings. Representatives of left-wing parties, on the other hand, spoke in favour of the federal government’s proposal.
+ How we produce news in English
Translated from German, reviewed by an English Department journalist.
