ZURICH (Reuters) – UBS Chairman Colm Kelleher warned on Sunday that the Swiss government's plans to tighten capital requirements for big banks could damage the country's position as a financial centre.
Earlier this year, the government laid out plans for stricter capital requirements for UBS and Switzerland's other big three banks in a bid to strengthen the financial sector after the collapse of Credit Suisse last year.
In an article published in Swiss newspaper SonntagsBlick, Kelleher said he agreed with most of the 22 recommendations in the government report, except for the proposal for stricter capital requirements.
“What really worries me is the increase in capital requirements. It just doesn't make sense,” he said of the so-called “too big to fail” report.
Details of the exact capital requirements have yet to emerge, although Finance Minister Karin Keller-Sutter said in April that estimates that UBS will need between $15 billion and $25 billion were “plausible.”
In a separate estimate, analysts at Autónomo Research said UBS may need to retain an additional $10 billion to $15 billion.
Kelleher declined to comment on figures but said excessive capital requirements would harm competitiveness and lead to less favorable pricing on banking products for customers.
“We should focus on more important issues, such as liquidity management and, above all, the full resolvability of a bank,” Kelleher told the newspaper.
Swiss banks contribute to its role as the world's leading financial center, with some $2.6 trillion in international assets under management, according to a 2021 Deloitte study. However, competition is increasing from Luxembourg and, in particular, of Singapore, which has grown rapidly in recent years.
UBS, which has a balance sheet twice the size of Swiss annual economic output, would pose serious risks to the Swiss economy if it were to collapse, experts have warned.
Kelleher downplayed the dangers, saying UBS had “significantly more” capital than comparable banks, while the bank's business model – based on wealth management and the Swiss domestic market – meant it was low risk.
UBS remained committed to Switzerland even if Bern demanded a large additional capital increase, said Kelleher, who has chaired it since 2022.
“Although we are a global bank, the heart of UBS is our Swissness,” he said, adding that there was “no doubt” the lender would abandon its home country.
However, he warned that if the bank were to increase its capital levels, it would be detrimental to Switzerland.
“If politics forces us to massively increase our capital, then Switzerland will have decided that it no longer wants to be a relevant international financial center,” Kelleher said.
“I don't think that can benefit the country.”
The former Morgan Stanley executive said he was willing to talk to the government about its proposals.
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