FINMA director: ‘Capital strengthening of UBS could take place in stages’

Finma: 'Capital strengthening of UBS could take place in stages' Keystone-SDA

The tightening of capital requirements for Swiss bank UBS could be introduced in stages, over several years, says Stefan Walter, director of the Swiss Financial Market Supervisory Authority (FINMA).

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In his view, it is better to implement the right solutions with the necessary transition period than to stay with the wrong solutions.

However, the bank led by Sergio Ermotti should not expect any concessions with regard to the core of the planned tightening, namely the full capital support of its foreign subsidiaries, Walter said in an interview news agency Bloomberg on Thursday. Ermotti and other bank executives have repeatedly spoken out against this demand in recent months.

As far as the treatment of subsidiaries is concerned, the proposal is “at the stricter end of the spectrum”, admitted the head of FINMA. In his view, however, it should be noted that in no other country does a large, systemically important bank have such a strong weight in the economy.

The decision on capital requirements will have to be made by parliament, and Walter – who moved from the European Central Bank (ECB) to FINMA a year ago – says he respects the democratic process. “But we are communicating our opinion on the matter very clearly.”

The treatment of UBS “is no more intense” than that of other big banks, the expert continued. “Compared to global standards UBS is still far from being over-regulated.” The fact that Switzerland, unlike other major banking centres, has fully implemented the Basel III final regulation is to be regarded as positive overall. “I think the additional resilience will be very favourable for a country with an open economy faced with a turbulent world,” said Walter.

The specialist, who also has a professional background at the New York Federal Reserve, also reiterated his demands regarding FINMA: clear independence, sufficient resources and the ability to intervene in good time. The German-born executive also emphasised that it is no secret that he is very outspoken on a number of issues, but claimed to find a great deal of support both inside and outside FINMA.

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Translated from Italian by DeepL/jdp

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