UBS Receives Reassuring Signals from Parliament

According to a report by the Financial Times (article behind a paywall), a group of parliamentarians from various parties has assured UBS leadership in informal discussions that the planned new regulations for Switzerland’s only remaining globally active systemically important bank will be watered down. UBS was reportedly told that efforts would be made to find a compromise on the proposals put forward by the Federal Department of Finance (FDF). According to sources, the Federal Council’s proposal would require UBS to increase its capital by around 22 billion dollar. Karin Keller-Sutter’s TBTF Proposal The reform package on «too big to fail» (TBTF) was presented last year by Finance Minister Karin Keller-Sutter, head of the FDF, in response to the collapse of Credit Suisse in 2023. The government’s decision could be published as early as April, while the most controversial aspect—requirements related to foreign capital—is expected to be debated in parliament. Stability vs. Competitiveness While regulators argue that the rules are necessary to protect depositors, critics—including UBS—warn that they could undermine the country’s competitiveness. A core group of lawmakers who consider the capital requirements too stringent has signalled to UBS that it wants to «resolve the issue through a compromise,» one source told the Financial Times. UBS executives are reportedly becoming increasingly frustrated with what they see as the Federal Council’s lack of willingness to negotiate. Chairman Colm Kelleher and CEO Sergio Ermotti have repeatedly warned of competitive disadvantages for UBS compared to the United States and the United Kingdom. There is also an unspoken possibility that UBS could feel compelled to relocate to a more favourable jurisdiction if no compromise is reached. Committee Proposal Rejected The Federal Department of Finance had rejected a compromise proposal put forward last November by the economic committees of both parliamentary chambers. One person involved in the discussions noted that the terms of a new compromise have not yet been defined. From May onwards, however, the National Council’s Committee for Economic Affairs and Taxation is expected to «take over» the process. «From that point, we will have greater decision-making power,» the person said. No Comment from UBS The proposals are expected to be debated by lawmakers during the summer session starting in early June. UBS declined to comment to the Financial Times. «Even if assurances are made, there is no guarantee that the final outcome will be acceptable,» a source close to the bank was quoted as saying.