UBS warns Swiss capital plan risks competitiveness and shareholder value

UBS has opposed Swiss authorities plans to tighten slope superior rules aft the illness of Credit Suisse, informing the reforms would rise its costs sharply, wounded the country’s competitiveness and measurement connected the wider economy.

In its ceremonial effect to a authorities consultation connected the betterment package, UBS said the betterment bundle – centred connected forcing the slope to afloat capitalise its overseas subsidiaries – is “excessive, disproportionate, not internationally aligned and not targeted”.

The slope estimated the program would summation its superior needs by astir $23–24bn, chiefly done further Common Equity Tier 1 capital.

UBS said the further requirements would assistance its yearly costs by astir $1.7bn and “jeopardise the continuation of the palmy UBS concern model”.

It argued the proposals are based connected “extreme” assumptions and would marque Switzerland uncompetitive compared with different fiscal centres, noting that “the [government’s] proposals would importantly summation the requirements and would opposition sharply with developments successful Europe and the US, wherever deregulation initiatives person already been announced”.

The slope said regulatory uncertainty since the announcement of an update to Switzerland’s authorities successful April 2024 has already deed investors.

UBS calculated that its marketplace worth underperformed European and US banking peers by 27% betwixt April 2024 and the extremity of past year, amounting to astir $37bn successful mislaid shareholder value, successful summation to astir $14bn successful costs tied to integrating Credit Suisse.

UBS argued that alternate options “which would person an equivalent effect astatine little cost” had “not been fixed capable consideration”, adding: “The [government] has rejected these [alternative proposals] due to the fact that they bash not conscionable the utmost nonsubjective of zero hazard tolerance.”

The slope called for Additional Tier 1 instruments and bail-in bonds to beryllium counted towards gathering stricter requirements and for AT1s to beryllium treated successful enactment with signifier successful the European Union and United Kingdom.

Swiss authorities outlined the superior reforms successful June arsenic portion of efforts to debar different Credit Suisse-style nonaccomplishment and to shield taxpayers, aft UBS acquired its erstwhile rival successful a state-orchestrated rescue successful 2023.

The betterment bundle besides includes measures to fortify the prime of UBS’s superior basal and remains taxable to parliamentary approval, with imaginable revisions inactive possible.

The Swiss Bankers Association (SBA) backed UBS’s concerns, arguing the proposals are disproportionate, misaligned with planetary standards and hazard undermining Switzerland’s lasting arsenic a fiscal centre without materially enhancing stability.