UBS: Swiss finance minister stands firm on capital requirements

Karin Keller-Sutter stands firm on capital requirements Keystone-SDA

Swiss Finance Minister Karin Keller-Sutter remains firm in her belief that full capital coverage of UBS’s foreign subsidiaries is necessary.

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“The requirements being called for in the current debate on UBS’s capital adequacy regulations are justified,” Keller-Sutter reiterated on Tuesday at the Point Zero Forum held at Zurich Airport. They are essential to ensuring financial stability, she added.

This applies not only to Switzerland, but potentially to the global financial system as a whole, she said. Keller-Sutter expressed concern about the situation in the United States, where ongoing deregulation could “pave the way for a new financial crisis”.

Furthermore, well-capitalised banks offer a kind of competitive advantage, as a stable and reliable financial system attracts more capital and inspires confidence, she said. The Credit Suisse debacle has demonstrated just how much a loss of confidence is one of the greatest dangers facing banks.

Rumours circulating in the press recently suggested that parliament would be considering a relaxation of future regulations for UBS, now envisaging a Common Equity Tier 1 (CET1) capital ratio of just 70% to 80%, compared with the initial 100%, for its overseas subsidiaries.

Such a measure would reduce the hard capital requirements that the banking group would have to meet to around $15 billion (CHF12.1 billion), whereas under the government’s proposal for full coverage, the cost would amount to CHF20 billion, according to Reuters, which cited anonymous sources close to the matter.

However, more than three-quarters of the Swiss population would be in favour of stricter regulation of systemically important institutions, according to a poll conducted by YouGov among 1,008 people and reported in the media in recent days.

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Translated from French, sub-edited by ts