UBS Chair Colm Kelleher cautioned on Sunday that the Swiss government's proposal to enhance capital requirements for major banks could undermine the nation's status as a financial hub. Earlier this year, the government outlined plans for stricter capital requirements for UBS and the country's three other large banks, aiming to fortify the financial sector following the collapse of Credit Suisse last year.
In an article published in the Swiss newspaper SonntagsBlick, Kelleher expressed agreement with most of the 22 recommendations in the government's report, except for the call for more stringent capital requirements. "What I strongly disagree with is the increase in capital requirements. It simply doesn't add up," he commented on the so-called "too-big-to-fail" report.
While the exact capital requirements remain undisclosed, Finance Minister Karin Keller-Sutter suggested in April that estimates of UBS needing an additional $15 billion to $25 billion were "reasonable." Independent analysts at Autonomous Research also projected that UBS might need to retain an extra $10 billion to $15 billion.
Kelleher refrained from commenting on specific figures but emphasized that excessive capital requirements would harm competitiveness and result in less favorable banking products for customers. "We should concentrate on more critical issues such as liquidity management and, most importantly, the complete resolvability of a bank," Kelleher advised the newspaper.
Swiss banks contribute significantly to the country's position as the world's leading financial centre, managing approximately $2.6 trillion in international assets, according to a 2021 Deloitte study. However, competition is intensifying from Luxembourg and notably Singapore, which has seen rapid growth in recent years.
Experts have warned that UBS, with a balance sheet twice the size of annual Swiss economic output, poses severe risks to the Swiss economy if it were to fail. Kelleher, however, downplayed these risks, noting that UBS holds "significantly more" capital than comparable banks and operates a low-risk business model focused on wealth management and the Swiss domestic market.
Kelleher affirmed UBS's commitment to Switzerland, even if Bern demands a substantial increase in additional capital. "Although we are a global bank, the core of UBS is our Swiss identity," he stated, adding that there was "no doubt" the lender would remain in its home country. Nonetheless, he warned that raising capital levels would be detrimental for Switzerland.
"If political forces compel us to significantly increase our capital, then Switzerland has chosen to no longer be a relevant international financial centre," Kelleher said. "I believe that cannot be in the country's best interest." The former Morgan Stanley executive expressed readiness to engage with the government on its proposals.
