By Ariane Luthi
BERN (Reuters) -The second-largest party in the Swiss parliament on Monday presented proposals to tighten regulation of UBS, including to significantly ramp up the capital the bank must hold.
The 49-page plan by the Social Democrats (SP) argues UBS should hold $40 billion more capital, working from the basis that it had $78 billion in CET1 capital – a closely watched measure of a bank’s financial strength – at the end of 2023.
Although the plan has little chance of winning parliamentary approval, it adds to pressure from the left for tougher rules on Switzerland’s last remaining systemically important global bank.
UBS, which has consistently pushed back against higher capital demands, said it continued to advocate for forward-looking regulation and a strong Swiss financial centre.
“Any adjustments to the requirements should be targeted, proportionate and internationally coordinated, with particular attention paid to competitiveness and economic costs,” it said.
Last week UBS got a reprieve of sorts on higher capital demands, when the finance ministry said it wanted parliament, and not just the government alone, to determine how well capitalised the bank’s foreign subsidiaries should be.
That decision likely delayed any imposition of stricter rules as the new U.S.
government and other countries move to loosen regulation, but also meant the bank faced longer uncertainty about the conditions it will have to operate under.
The SP argues that far-reaching measures are necessary to better protect Switzerland from the next banking crisis after the 2023 collapse of Credit Suisse, which UBS then acquired.
“We need stronger stabilisation mechanisms,” said Roger Nordmann, an SP lawmaker who sat on the parliamentary committee that investigated Credit Suisse’s demise.
“A new crisis can arise quickly.”
The plan also foresees UBS paying for a state guarantee and creating an internal structure that separates business units more clearly from each other.
Other proposed measures include the establishment of an earnings pool at the Swiss National Bank, in which dividends and bonus payments above a certain threshold would be retained for several years and tapped in the event of a crisis.
(Reporting by Ariane Luthi; Additional reporting by Oliver Hirt; Editing by Dave Graham and Alex Richardson)
