UBS Gets Sign of Support from Swiss Lawmakers in Capital Row
(Bloomberg) — Swiss lawmakers criticized a government proposal on parts of new capital rules affecting UBS Group AG, in an early signal of support in parliament for a softer stance on the country’s largest bank.
The lower house’s economy and taxation committee — which is in charge of financial regulation — voted on Tuesday in favor of sending a letter to the government to that effect following a debate on capital quality rules, according to a statement.
“Care should be taken not to exceed international standards and common practice in competing financial centers,” lawmakers said in the letter. “The stricter regulations must ensure a competitive cost-benefit ratio of the Swiss capital regime.”
The comments from the influential panel could signal that UBS is gaining political support among lawmakers in its bid to water down post-Credit Suisse rules which it says will make it uncompetitive against peers. The government has proposed increasing the bank’s capital requirements by as much as $26 billion to ward off the risk that it ever needs to be rescued again.
UBS Chairman Colm Kelleher, who has sharply criticized the proposals, said earlier Tuesday that the country is having an “identity crisis” about its role as a financial center.
UBS declined to comment on the lawmakers’ statement.
The committee was debating measures relating to deferred tax assets and other items which are set to lift UBS’s capital requirements by some $3 billion, according to the government. They are separate to a larger parliamentary package on capital which could result in a $23 billion increase in capital requirements for the bank. The government can push the capital quality measures through without parliament’s blessing, but is expected to take opinions there into account.
Kelleher’s remarks prompted the caucus leader of the largest party in Switzerland’s parliament to call on the government to change course in the financial regulation it pursues.
“I can well understand Mr Kelleher’s concern,” Thomas Aeschi of the Swiss People’s Party said. “The administration must find a moderate middle ground.” The SVP, as it’s known, has around 30% of seats in the lower house.
When the more significant part of the government’s reform agenda comes into parliament — not before the second half of next year — the support of Aeschi’s party could be crucial for the executive and finance minister Karin Keller-Sutter.
The measures debated on Tuesday update by ordinance how lenders have to quantify intangible items such as deferred tax assets, in-house software and other hard-to-value items they have on their books. The other part is a law stipulating that foreign units of international banks must be fully backed with capital at home.
The smaller part is expected to take effect around the beginning of 2027, while the broader bill will only come into force in 2028 or 2029. Lawmakers voted against a motion to delay the smaller part in September.
(Updates with more background and quotes from third paragraph.)
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