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The chair of UBS has criticised proposed reforms to bank capital rules in Switzerland, calling the measures “extreme” and saying they would force the lender to hold 50 per cent more capital.
Colm Kelleher said on Thursday that new rules being proposed by the Swiss government and financial regulators would significantly push up the lender’s capital requirements and could damage its ability to compete internationally.
“Finma and the Swiss National Bank stipulate additional capital requirements, which would lead to a 50 per cent increase in capital requirements as compared to today,” he told UBS’s annual general meeting.
“We strongly oppose these extreme additional capital requirements. UBS is already subject to some of the most stringent capital requirements in the world.”
The comments mark the latest signs of tension between UBS and the Swiss political and regulatory establishment over the proposed reforms, ahead of draft legislation on the new rules which is set to be presented to lawmakers by June.
Officials are pushing for UBS to fully back its foreign subsidiaries — a move that would increase its capital requirements by up to $25bn — to strengthen the stability of the country’s financial sector in the wake of Credit Suisse’s demise and to protect against a potential future rescue of the enlarged lender.
UBS — which took over its rival Credit Suisse in a state-sponsored rescue in 2023 — remains Switzerland’s only bank on watchdogs’ list of global systemically important lenders.
The bank and officials have been at loggerheads since the proposals were first mooted last year, with UBS lobbying strongly against the capital reforms and arguing that the changes would damage its international competitiveness.
Other countries, led by the US, are looking to roll back reforms introduced by global regulators in the wake of the financial crisis. The UK has said it will postpone the start of new capital rules for British banks by a year.
Kelleher said on Thursday that the changes would result in UBS having a so-called core equity tier 1 ratio — a key measure of capital strength — “that would be 50 per cent higher than that of our international competitors”.
“Let me be crystal clear on this point: overregulation in Switzerland is a very big risk to the long term success of UBS,” he said. “On behalf of our shareholders, it is our fundamental fiduciary duty to mitigate this risk.”
He added: “UBS is already hampered by the existing regulatory ‘Swiss finish’. Adding another ‘Swiss finish’ on top — while other financial centres are easing regulations — would harm UBS, the Swiss financial centre and the broader economy.”
Separately, Kelleher said that UBS would stick to its plan for a $3bn buyback this year, despite the uncertainty surrounding the capital reforms.
The bank announced in February that it would repurchase $1bn in shares during the first half of 2025, and up to an additional $2bn in the second half of the year, but cautioned that the buyback plan could be derailed by reforms to the country’s bank capital regime.
“In the absence of any significant, immediate changes to the current capital regime, we remain committed to returning capital to our shareholders,” Kelleher said on Thursday.