UBS Chairman Colm Kelleher warned on September 29th that the Swiss government's plan to increase capital requirements for large banks could harm the country's status as a financial hub.
Earlier this year, the Swiss government proposed stricter capital rules for UBS and the country's other three major banks, following the collapse of Credit Suisse last year. The move aims to enhance the stability of the financial industry.
Kelleher expressed support for the majority of the 22 recommendations in the government report, except for the stricter capital requirements. Although specific details have not been disclosed, Finance Minister Karin Keller-Sutter mentioned in April that UBS might need to raise an additional $15-25 billion. Another estimate from Autonomous Research suggested an extra $10-15 billion might be needed.
Kelleher argued that excessively high capital requirements would damage competitiveness and make banking products less affordable for customers. He emphasized the importance of focusing on liquidity management and the resolvability of banks.
Swiss banks manage around $2.6 trillion in international assets, contributing significantly to the country's status as a top financial center. Analysts have noted that UBS's balance sheet size is double Switzerland's annual economic output, posing a considerable risk if the bank were to fail.
Kelleher downplayed this risk, stating that UBS holds significantly more capital than its peers and operates mainly in wealth management and the domestic market, which are lower-risk areas. He cautioned that if political forces mandate a large capital increase, it would signal that Switzerland no longer wishes to be a major international financial center, which he believes is against national interests.
