Summary: UBS Group AG’s Chairman, Colm Kelleher, expressed concerns that the Swiss government’s plans to raise capital requirements for major banks could jeopardize Switzerland’s status as a leading financial hub.
At a time when financial stability is under scrutiny, Kelleher highlighted the Swiss government’s proposal for stricter capital regulations for UBS and three other major banks in response to the fallout from the Credit Suisse collapse last year. In an article for the Swiss newspaper SonntagsBlick, Kelleher supported most of the recommendations from the government’s report but firmly opposed the suggested increase in capital requirements.
Concerns About Competitiveness
Kelleher articulated his reservations regarding the proposed capital increases, stating, “What I really have a big problem with is the increase in capital requirements. It just doesn’t make sense,” referring to the so-called “too-big-to-fail” report. While specific details regarding the new capital requirements remain unclear, Finance Minister Karin Keller-Sutter previously estimated that UBS might need to secure an additional $15 billion to $25 billion in capital.
Analysts from Autonomous Research have projected that UBS could require an extra $10 billion to $15 billion. Although Kelleher did not comment on these figures, he warned that excessively high capital requirements could undermine UBS’s competitiveness and lead to less favorable pricing for banking products offered to consumers.
Focus on Key Issues
Kelleher urged the government to prioritize other critical aspects of financial stability, including liquidity management and ensuring that banks can be effectively resolved if they face difficulties.
Swiss banks play a vital role in maintaining the country’s status as a global financial center, managing approximately $2.6 trillion in international assets, according to a Deloitte study from 2021. However, rising competition from financial centers like Luxembourg and Singapore poses a challenge.
UBS, which has a balance sheet exceeding the annual Swiss economic output, could present significant risks to the Swiss economy if it were to fail. Despite these concerns, Kelleher noted that UBS possesses “significantly more” capital than its peers and maintains a low-risk business model centered around wealth management and the Swiss domestic market.
Commitment to Switzerland
Kelleher reaffirmed UBS’s commitment to Switzerland, stating that despite potential demands for substantial capital increases, the bank would not consider relocating. “Although we are a global bank, the heart of UBS is our Swissness,” he emphasized, dismissing the notion of exiting Switzerland as out of the question.
Nevertheless, he cautioned that any forced increase in capital levels could have adverse effects on the country’s financial standing. “If politics forces us to massively increase our capital, then Switzerland has decided that it no longer wants to be a relevant international financial center,” he stated, adding that such a decision would not be in the best interest of the nation.
Kelleher, who has been at the helm of UBS since 2022, expressed his readiness to engage with the government regarding its proposals.
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