UBS must build up more equity, says Swiss government

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Keller-Sutter emphasised the importance of the proposal that the Swiss parent companies of systemically important banks must in future back their foreign holdings with up to 100% equity. Currently, the capital adequacy requirement is 60%, she said.

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UBS already has to build up additional equity capital because it has become much larger as a result of the Credit Suisse takeover, Keller-Sutter said. The Financial Market Authority has given UBS until 2030 to implement these progressive capital surcharges.

However, the capital for additional equity backing for the foreign subsidiaries is not part of this because the amount of backing required has not yet been determined, she said. “If this measure is implemented, UBS will have to build up more capital.” She said the exact amount would depend on UBS’s performance and the exact wording of the ordinance. “But we are talking about tangible, significant sums.”

‘Not a risk-free business’

Dividing up the bank, so a pure separation banking system, is an illusion and not necessarily less risky, Keller-Sutter believes. Lehman Brothers, for example, effectively operated only one business, investment banking, she said. “Nevertheless, its demise triggered a global financial crisis.”

“UBS’s main business is asset management. This is also not a risk-free business,” says Keller-Sutter, explaining that the government’s measures were aimed at limiting the specific risks.

Translated from German by DeepL/ts

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About Swissinfo

SWI swissinfo.ch – the international service of the Swiss Broadcasting Corporation (SBC). Since 1999, swissinfo.ch has fulfilled the federal government’s mandate to distribute information about Switzerland internationally, supplementing the online offerings of the radio and television stations of the SBC. Today, the international service is directed above all at an international audience interested in Switzerland, as well as at Swiss citizens living abroad.

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