Former Swiss finance minister warns against size of UBS expansion, By Reuters

ZURICH (Reuters) – UBS could be seen as Switzerland’s biggest bank following its takeover of Credit Suisse, former Swiss Finance Minister Ueli Maurer said on Saturday, as measures are needed to reduce the stretched bank’s risk.

“If you look at the numbers alone and compare UBS with the Swiss economy, it’s huge,” Maurer told the Tages-Anzeiger newspaper. Therefore, the risk should be minimized.

At around 1.7 billion, UBS’s balance sheet doubles the size of Switzerland’s annual economic output, which gives the bank a special macroeconomic weight.

If the bank fails, there are no local rivals left to eat, and the cost of privatization could seriously damage public finances, experts have warned.

Mitigating risk was the responsibility of shareholders through their selection of board members, Maurer said.

“They have to take responsibility, not the taxpayers in the end,” said Maurer, who stepped down a few months before Credit Suisse’s final collapse in March 2023.

“Legal measures must also be considered,” said Maurer, who also responded after a recent parliamentary report raised questions about his actions as Credit Suisse’s crisis worsens by the end of 2022.

The Swiss government last year imposed strict capital requirements for UBS and three other major Swiss banks in an effort to make the financial sector more resilient after the demise of Credit Suisse.

Details of the exact capital requirements are yet to emerge, but UBS is likely to be held to $15 billion to $25 billion in additional capital if it meets with bank resistance.

Maurer said that if capital requirements are too high, Swiss banks will no longer be able to compete and may look based elsewhere.

“In Switzerland’s multinational economy, the central bank is a local advantage,” he said. “But the risk must be reduced.”

UBS has been contacted for comment.