UBS Opposes Credit Suisse-Inspired Reforms

UBS has pushed back against Swiss government proposals to tighten banking capital rules introduced in the wake of the 2023 collapse of Credit Suisse, warning the measures would weaken its ability to compete internationally.

The plans are intended to reduce the risk of another major Swiss bank failure and limit potential costs to taxpayers following UBS’s takeover of Credit Suisse for CHF 3bn ($3.2bn) in a state-supported rescue. However, UBS said existing regulations are already robust and that the proposed changes would not address failures like those behind Credit Suisse’s demise.

“Switzerland already has one of the most stringent regulatory capital frameworks,” UBS said. The bank argued that, if implemented, the proposals would leave it facing capital requirements at least 50% higher than those of key global rivals, constraining operations and even damaging Switzerland’s standing as a financial center.

At the core of the reform package is a requirement for UBS to fully capitalize its foreign subsidiaries. UBS described the approach as excessive and out of step with international norms. The bank estimated the additional burden would increase its annual costs by around $1.7bn.

UBS also said the proposals rely on “extreme”  assumptions and contrast sharply with recent regulatory trends in other major markets, including Europe and the US, where policymakers have signaled moves towards easing certain banking rules.

The Swiss Bankers Association (SBA) echoed UBS’s concerns, arguing the reforms are misaligned with global standards and unlikely to materially enhance financial stability. The association said the Credit Suisse crisis stemmed from regulatory discretion rather than insufficient capital requirements.

“Simply avoiding such concessions in future would be entirely sufficient,” said SBA chair Marcel Rohner.

“In times of geopolitical and economic tension, competitiveness takes on even greater significance. It is thus especially important for banking regulation to be proportionate, targeted and aligned with international standards,” he added.