Does a giant UBS offer more risk or reward?
UBS has ambitious growth plans since taking over rival bank Credit Suisse. Switzerland’s last remaining large global bank wants to turbo-charge its wealth management business and gain market share around the world. This makes some people nervous. UBS’s balance sheet is already twice the size of the entire Swiss annual economic output. This means the bank could bring down the economy if it goes bust.
What do you think? Does an ambitious global bank promise greater prosperity for Switzerland? Or does the risk represent too much of a gamble for such a small country?
More
Does Switzerland need a huge global bank?
High salaries are common in this industry. However, the person should be liable with private assets if the business goes wrong.
Hohe Löhne sind in dieser Branche sind üblich. Die Person sollte aber mit Privatvermögen haftbar sein, wenn die Geschäfte schief laufen.
UBS in it's current set up is clearly too big of a bank for country of 8 million people. There are examples available of what happens when a completely oversized bank collapses.
Switzerland would have to call upon the EU to jump in and rescue. It's pretty clear what consequences this kind of a move would have. The EU membership for Switzerland would clearly be mandatory.
We will see where this is going to go. But it's clearly unresolved at this point in time.
I think that 50% of the bonuses of the decision makers of UBS should be held for 10 years in an escrow account, in UBS shares before paid out.
In compensation, they could be taxed at at low level (5-10%) at the paid out date.
This would oblige UBS decision making process to work out a modus operandi from within
Thanks for your contribution. The Swiss government is already making plans give the financial regulator greater powers to hold managers accountable. This is an issue for parliament to debate in the coming months. https://www.swissinfo.ch/eng/banking-fintech/how-to-tame-ubs-without-making-the-bank-toothless/75541822
Some Governments, like the UK, bail out failing banks (but do not get paid back when times are good again). The CH Gov allowed Credit Suisse to fail. Why? Putting all of your eggs in one basket is a recipe for disaster. UBS is now huge. What happens if it fails?
Thanks for your contribution Lynx. The 'Monster' UBS debate is a hot topic for Switzerland right now. The central bank, with the backing of the government, tried to rescue Credit Suisse with emergency liquidity - but failed. Measures were also in place to allow an 'orderly' bankruptcy but the government appears not to have fully trusted the plan. This does indeed beg the "what if" question in the case of UBS.
In my opinion, I would call for a popular initiative for the Swiss state to acquire 51% of the Bank's shares. That way it could control what UBS does.
En mi opinion,llamaria a una iniciativa popular para que el estado Suizo adquiera el 51% de las acciones del Banco.De esa manera podría controlar lo que hace el UBS.
That's an interesting point Daniel. Citizens in Switzerland always have the chance to step in to resolve a situation if they don't agree with the decisions of politicians. At the moment, the political landscape is divided on what to do with Too Big to Fail banks. A future public vote on the matter could never be ruled out.
Ministry did total immature and wrong decision in killing Credit Suiess completely. Thats why educated and unbiased ministers should be put in ministry and not people just surface knowledge.
Reclaiming back bonus and possibility of even punishing them with jail terms must be in law. This fear itself will solve 99% problems
Win Einfach:
The bigger they are, the more noise they make when they fall :-)
Ganz Einfach:
Cuanto más grandes, más ruido hacen al caer :-)
We have seen worldwide, not only in Switzerland, that large banks took large risks (for large bonuses?). Consequently it might be safer for all to have many smaller banks rather than fewer large ones.
Large banks, and not just in Switzerland, are already much too powerful.
Join the conversation!