UBS Making Progress on Wind-Down Plans, Swiss Watchdog Says

(Bloomberg) — UBS Group AG made further progress in its plans for crisis situations including any potential wind-down, though more work is needed, according to Switzerland’s financial regulator.

In a report on bank resolution, Finma said that the country’s sole globally significant lender had workable plans for restructuring and resolution, but to stabilize acute emergency situations more room for maneuver is needed. That will also require legislative changes, Finma added.

The emergency planning “needs to be better integrated in the resolution plan in the future and thus cannot currently be regarded as executable,” Finma said in a statement.

UBS is working to integrate Credit Suisse following the emergency takeover in 2023, and is already facing substantially higher capital requirements as a result of its increased size and complexity. Last year Finma said the bank needed to revise its emergency planning to take account of the acquisition, to enable orderly functioning of domestic activities in a crisis situation.

Major banks in Europe are legally required to have written instructions for how to ensure an orderly wind-down or prepare a sale when they’re in trouble. Those plans are intended to help prevent any crisis at an individual bank from expanding into a systemic one.

“As confirmed by Finma, UBS fulfills the current requirements to be resolved according to the preferred resolution strategy in the event of a crisis,” UBS said in a separate statement.

The emergency plan “would be available in an extreme crisis scenario,” UBS said. “This plan is designed in line with current legal requirements, to ensure the continuation and protection of systemically important functions in Switzerland, and is implementable for this purpose.”

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