UBS rejects proposed Swiss bank rules, argues for less costly alternatives

UBS (UBS) is rejecting government proposals to strengthen regulations for the bank in the wake of the collapse of Credit Suisse, saying they would make Switzerland uncompetitive and arguing instead for less costly alternatives. “UBS supports measures to further strengthen Swiss financial stability, but opposes the proposed capital measures, both at ordinance and legislative level, because they are not proportionate, targeted or internationally aligned. Switzerland already has one of the strictest regulatory capital regimes. Under these proposals, UBS would have at least 50% higher capital requirements than its competitors, adversely affecting UBS’s business activities in Switzerland and abroad, ultimately undermining the international competitiveness of the Swiss financial center and in turn the Swiss economy. UBS has a sustainable, profitable and globally integrated business model focused on Switzerland and its international asset gathering businesses. Foreign subsidiaries are an integral part of the parent bank. Completely insulating it from risks arising from foreign business activities booked in subsidiaries contradicts the business model of a global financial institution. We consider the current regulation for the treatment of foreign subsidiaries to be sufficient; consistent application of the current regime could have enabled a timely restructuring of CS as a going concern. The legislative changes as currently drafted do not address the vulnerabilities exposed by the Credit Suisse crisis, nor do they adequately reflect the lessons learned from that experience. The proposals insufficiently account for loss-absorbing capacity outside of CET1 that would become available in a crisis; for very extreme scenarios UBS has recovery and resolution plans which have been confirmed as credible by our regulators in Switzerland and abroad.”