UBS CEO Says Swiss Population Cap Is ‘Not the Solution’

(Bloomberg) — UBS Group AG Chief Executive Officer Sergio Ermotti said he worries about Switzerland’s proposed population cap initiative, saying this is not a solution to the country’s problems.

“I do worry about these extreme initiatives,” he said at the Swiss Economic Forum conference in Interlaken on Thursday. “Switzerland has 30% of foreign-born people, almost like in Australia, twice as Germany. And that leads to certain frustration within society. But it’s not a way to solve the problem.”

UBS is one of Switzerland’s largest private-sector employers, with more than 30,000 employees based in the country. The bank has a significant international workforce.

On June 14, Switzerland will vote on a plan to cap the population at 10 million. With the number already above 9.1 million, annual migration would have to drop by at least half to avoid reaching the ceiling by 2050, as proposed in the initiative.

Separately, UBS is awaiting Switzerland’s ultimate decision on its new capital requirements. In late April, the government watered down part of the reforms but refused to back down on its core demands. The core package is now being debated in parliament and the process is expected to last until next year.

The discussions need to be balanced, Ermotti said, adding that the final decision from the Swiss authorities on the matter should be based on fact rather than emotion and scaremongering.

The Swiss government wants to force UBS to raise the amount of common equity capital it holds domestically against its foreign operations to 100% of each unit’s equity value, from 60% at present. UBS estimates that this would require it to add about $20 billion in CET1 capital to its Swiss entity. The lender has said that the plan would severely damage its business model, and by extension hurt the domestic economy.

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