Swiss regulator tells UBS to strengthen its crisis plans

Keystone / Ennio Leanza

UBS must improve its emergency plans following its takeover of Credit Suisse to ensure the bank can be wound down or sold without risking financial stability and taxpayer cash, Swiss regulator FINMA said on Tuesday.

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FINMA said it had suspended the annual approval of UBS’s recovery and emergency plans while Switzerland’s last globally systemically important bank develops its approach as it integrates Credit Suisse.

“Based on the experience of the Credit Suisse crisis, additional options for action are required to further strengthen crisis preparations and resolution planning for systemically important banks,” FINMA said in a statement.

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UBS said it had already begun work on further developing its existing emergency plans “in a targeted manner”.

“As FINMA confirmed in its press release, UBS meets the current requirements to be resolvable in accordance with the preferred restructuring strategy in the event of a crisis,” the Swiss bank said in a statement.

FINMA said UBS’s emergency plan must ensure the Swiss entity can continue to operate without interruption even if there were a risk of insolvency.

“In its emergency plan, UBS must in particular revise the liquidity planning and the refinancing of the Swiss entity when the emergency plan is activated,” the regulator said.

The Credit Suisse crisis had highlighted problems related to the speed and extent of deposit withdrawals, and there needed to be a stronger focus on measures to generate liquidity, it added.

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Emergency rescue

UBS bought Credit Suisse in an emergency rescue in March 2023 after the latter experienced a liquidity crisis.

The collapse of the country’s second-largest lender prompted deep soul-searching among Swiss financial authorities and promises to make the system more robust.

FINMA has repeatedly called for greater powers to oversee banks, after it was accused of doing too little to prevent the implosion of Credit Suisse.

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