Worries of too large UBS are ‘over the top’, says SNB head
Worries that UBS Group is now too big for Switzerland are exaggerated, according to the country’s central bank chief.
Such a suggestion is “over the top”, Swiss National Bank (SNB) President Thomas Jordan told Swiss public broadcaster, SRF, in an interview on Monday. “It needs the right regulation, good supervision, good preparation.”
The forced takeover of Credit Suisse created a banking juggernaut. The size of the combined UBS-Credit Suisse group is twice that of the Swiss economy. That has raised questions over what would happen should another crisis arise.
+ Why a monster UBS bank scares Switzerland
In the interview Jordan also said Swiss inflation had probably accelerated this month but had stayed within the Swiss National Bank’s target range.
“Our expectation is that inflation went up, because of the VAT increase and electricity prices,” he said. “But it shouldn’t go above 2%. That’s the base scenario.”
Swiss consumer-price data for January are due on February 13. Inflation has been within the SNB’s price 0%-2% target range since June, when rates were last hiked. Economists currently predict a first cut in September.
Without commenting on those expectations, Jordan said that – for this year – inflation should average below 2%.
“The situation is much better,” he said.
Jordan also said the SNB takes the strength of the franc into account, adding that “the exchange rate is very important for us.”
+ Swiss central bank sees independence as the guarantor of growth
Painfully strong franc
The SNB has been struggling with the persistent strength of the Swiss currency after it allowed some appreciation in a bid to cool inflation. Last week, Jordan acknowledged in a speech that the franc’s strength is painful for firms selling their goods abroad.
“I have a lot of respect that exporting companies manage to stay competitive,” he said on Monday. “But a lot of their difficulties aren’t due to the exchange rate, but due to sluggish growth worldwide.”
The franc gained nearly 10% against the dollar last year – the biggest advance among the Group of 10 and the currency’s best run since 2010.
+ Why is the Swiss franc appreciating so much?
Earlier on Monday, Julius Bär Group economist David Alexander Meier termed the franc “again overvalued”, a callback to the years through 2022 when the central bank intervened to keep the currency’s rise in check.
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