UBS chief Sergio Ermotti criticises Swiss regulators over Credit Suisse

UBS chief executive Sergio Ermotti was brought back to the bank days after its state-orchestrated rescue of Credit Suisse. Keystone/Georgios Kefalas

UBS chief executive Sergio Ermotti has lambasted Swiss authorities for allowing Credit Suisse to fail, as his bank fights back against growing calls within the country to increase UBS’s capital requirements.

Ermotti, who was brought back to UBS just days after its state-orchestrated rescue of Credit Suisse last March, criticised the oversight of the fallen bank in a speech on Wednesday.

“It’s especially confusing, if not extraordinary, to see many of the people who were in charge over the years saying they did everything correctly in relation to the management and supervision of Credit Suisse,” he said at the University of Zurich.

“Everyone who was involved needs to critically analyse the role they played and face up to their responsibilities. It takes courage to own up to shortcomings. But we must learn from past mistakes.”

+ Does Switzerland need a huge global bank?

His salvo comes a day after the new head of FINMA, the Swiss financial regulator with supervisory responsibility over the country’s banks, said he supported new rules proposed by the finance ministry that could significantly increase UBS’s capital requirements. Analysts have predicted that the rule change could lead to between $15 billion (CHF13.5 billion) and $25 billion of additional capital for UBS.

“Fourteen months after the Credit Suisse rescue, we are in the midst of an intense and often superficial debate over whether UBS is too big for Switzerland,” Ermotti said on Wednesday. 

“To be honest, it’s quite surprising how quickly UBS went from being perceived as a saviour to a potential future problem for the country.”

Growing animosity

Much of the growing animosity stems from a report published by the finance ministry last month, which included a proposal that banks with international businesses should be forced to hold higher amounts of capital.

+ UBS to face tougher rules in Swiss response to Credit Suisse rescue

Ermotti told analysts at the bank’s first-quarter results last week that UBS had not been consulted on the proposals, even though as the country’s most global lender, it would be hit the hardest.

While the report did not contain any details about what the requirements could look like – and they are not due to be put forward to the Swiss parliament until next year – Finance Minister Karin Keller-Sutter has indicated that analyst estimates of $15 billion and $25 billion of additional capital is “plausible”.

On Tuesday, Stefan Walter, the new head of FINMA, told a banking conference in Switzerland that he supported UBS increasing its capital on foreign subsidiaries.

“The more difficult it is to resolve a bank, the higher the precautionary capital buffers need to be,” he said. “We will keep a very close eye on this.” 

Also commenting on the capital rules this week, IMF managing director Kristalina Georgieva told Swiss media outlet SRF that the agency had concerns about supervision of the Swiss finance industry as far back as 2019.

She added that she expected other countries to follow Switzerland’s lead and propose increasing the capital requirements on their banks in response to the failure of Credit Suisse and several US lenders last year.

Copyright The Financial Times Limited 2024