The chairman of UBS warns of a large increase in capital requirements, reports By Reuters newspapers
The CHAIRMAN of UBS, Colm Kelleher, on Sunday warned that the Swiss government’s plans to tighten requirements for central banks could damage the country’s position as a financial centre.
The government earlier this year imposed tougher capital requirements plans for UBS and three other big Swiss banks in a bid to make the financial sector more resilient after the collapse of Credit Suisse last year.
In an article published in the Swiss newspaper SonntagsBlick, Kelleher said he agreed with most of the 22 recommendations in the government report, except for the proposal for stricter monetary requirements.
“The biggest problem with it is the increase in money needs. It doesn’t make sense,” he said of the report called “the big one who fails”.
Details of the exact capital requirements are yet to emerge, although Finance Minister Karin Keller-Sutter said in April that UBS’ estimates that it would need an additional $15 billion to $25 billion were “reasonable”.
In a separate estimate, analysts at Autonomous Research said UBS may need to keep an additional $10 billion to $15 billion in cash.
Kelleher declined to comment on the numbers, but said higher cash requirements would hurt competition and lead to lower prices for banking products for customers.
“We have to focus on more important things like financial management and above all, the complete solvency of the bank,” Kelleher told the newspaper.
Swiss banks contribute to their role as the world’s largest financial institution, with international assets of less than $2.6 trillion, according to a 2021 study by Deloitte. However, competition is rising from Luxembourg and especially Singapore, which has grown rapidly in recent years.
UBS – which has a balance sheet twice the size of Switzerland’s annual economy – could pose a major risk to the Swiss economy if it were to collapse, experts have warned.
Kelleher downplayed the risks, saying UBS held “much more” capital than similar banks, and the bank’s business model – based on wealth management and the Swiss home market – meant little risk.
UBS remained committed to Switzerland even if Bern wanted more capital, said Kelleher, who has been chairman since 2022.
“Although we are a global bank, the heart of UBS is our Switzerland,” he said, adding that there was “no doubt” the lender would leave its home country.
However, he warned that if the bank were to raise its currency rate, it would be dangerous for Switzerland.
“If politics forces us to increase our capital a lot, then Switzerland has decided that it no longer wants to be an international financial center,” said Kelleher.
“I think that would not be in the interest of the country.”
The former Morgan Stanley executive said he is ready to talk to the government about its proposals.
