Swiss business groups lobby against UBS capital rules ahead of vote

by@Reuters

Summary

Swiss business groups are lobbying the Swiss parliament against proposed tougher capital rules for UBS, arguing that the regulations are excessively stringent and could significantly disadvantage the bank in comparison to international competitors. This push comes after the government's assertion that stricter measures are necessary to fortify the banking sector and protect taxpayers against future crises, particularly following the collapse of Credit Suisse in 2023. The business associations have put forth a compromise proposal that suggests a mixed capital backing structure of 50% Common Equity Tier 1 capital and 50% Additional Tier 1 bonds, in hopes of preserving the financial center's competitiveness while maintaining systemic stability. The upper house is set to vote on the reform proposals soon, which could require UBS to hold an additional $20 billion in capital.

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Analysis

UBS: UBS is Switzerland's largest bank and a major global financial services firm providing investment banking, wealth management, and other services. In this news, the bank is the focus of government proposals for stricter capital rules aimed at bolstering resilience after the 2023 Credit Suisse collapse. UBS executives have publicly cautioned against overly stringent measures that could harm its competitive position. Colm Kelleher: Colm Kelleher is the Chairman of UBS and oversees the board's governance on key regulatory and risk matters. He has joined calls for lawmakers to avoid imposing overly punitive capital rules following the Credit Suisse events. Kelleher has highlighted that while some proposals would be painful, certain compromises remain feasible for the institution. Sergio Ermotti: Sergio Ermotti serves as CEO of UBS and leads the bank's strategic response to regulatory developments. He has urged Swiss lawmakers in recent days to reject excessively harsh capital requirements on the bank. Ermotti indicated that a proposed compromise option involving Additional Tier 1 bonds would be manageable though still challenging. economiesuisse: economiesuisse is a leading Swiss business federation representing major companies and industry interests in economic policy debates. It has coordinated with other business groups to lobby parliament against the government's capital rule proposals for UBS. The organization signed a letter warning that the measures risk disadvantaging Swiss industry through higher financing costs and reduced credit availability. Regulation: The Swiss government maintains that stricter capital rules for UBS are essential to strengthen the banking sector and shield taxpayers from future bailout risks. Industry Lobbying: Swiss business associations are actively advocating for a compromise capital backing structure involving a mix of equity and bonds to preserve the competitiveness of the financial center. Legislative Timeline: The Swiss upper house is scheduled to vote on the UBS capital reform proposals in the coming days following the business groups' letter to lawmakers.

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