UBS is pressing the Swiss government to clarify additional capital buffer requirements following its acquisition of Credit Suisse. The bank is concerned that prolonged uncertainty will unsettle investors. While initial government proposals were seen as mild, new signals from the Swiss regulator FINMA’s head suggest that UBS might need to hold more capital, raising questions about whether the estimated $15-$25 billion in extra capital is in addition to the $19 billion UBS has already committed.
The ambiguity over capital requirements is crucial as Switzerland aims to reinforce its financial system after the collapse of Credit Suisse. UBS executives worry that heightened capital demands could disadvantage the bank compared to U.S. and European competitors, potentially necessitating asset sales and impacting plans to return cash to shareholders. UBS shares have declined over 3% since the draft rules were introduced, contrasting with a 2% rise among peers.
Switzerland’s new banking rules are expected by late 2025 or early 2026, with a draft due in early 2025. FINMA’s head supports full capitalization of bank subsidiaries, implying UBS may need more capital beyond the $19 billion planned. UBS’s CEO has criticized calls for more regulation, fearing it could undermine Swiss banking. The bank faces additional pressures from new liquidity rules and the integration of Credit Suisse clients, with any delays potentially affecting cost savings.
Source: Reuters