Switzerland’s largest bank has slammed a government plan designed to prevent a repeat of the Credit Suisse collapse—plans that could force UBS to hold billions more in capital. The news was reported by SRF and Bloomberg.
This week, Switzerland’s Federal Council unveiled a package of measures aimed at reducing the systemic risks posed by the country’s oversized banking sector. The proposal follows the emergency rescue of Credit Suisse in March 2023, which exposed serious flaws in Switzerland’s regulatory framework and reignited debate over “too big to fail” banks.
Key elements of the government’s blueprint include tougher capital requirements, expanded powers for the financial regulator Finma, and a mandate for banks to designate executives accountable for crisis planning. The legislative process, still in its early stages, is expected to unfold over several years—and could culminate in a national referendum.
One of the most contentious part of the proposal concerns how much capital UBS must hold in its foreign subsidiaries. Credit Suisse’s weakly capitalised overseas units had exacerbated its downfall. The government now wants to ensure that any future losses abroad are better contained. Under the new regime, UBS could be required to raise as much as $US 23 billion in additional capital over the next six to eight years—a demand the bank warns could cost it up to $1.3bn annually and dent its global competitiveness.
UBS has dismissed the proposed rules as excessive and signalled it will fight to soften them during the upcoming consultation process, due to begin this autumn. While the Federal Council did ease some thresholds for capital at the parent level, the overall direction of reform has prompted vocal resistance from the bank’s leadership.
Two expert reports released alongside the proposals underlined the long-term nature of the reforms. Even if approved, the new capital requirements are unlikely to take effect before 2028—and UBS could have until 2036 to fully comply. By then, it will be thirteen years since the Credit Suisse crisis.
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