ZURICH (Reuters) – UBS President Colm Kelleher warned on Sunday that Swiss government plans to boost capital requirements for major banks could harm the country’s position as a financial centre.
The government earlier this year laid out plans to tighten capital requirements on UBS and the other three big banks in Switzerland in an attempt to make the financial sector stronger after the collapse of Credit Suisse last year.
In an article published in the Swiss newspaper Sontags Blick, Kelleher said he agreed with most of the 22 recommendations in the government report, with the exception of the proposal for stricter capital requirements.
“What I really have a big problem with is increasing capital requirements,” he said of the so-called “Too Big to Fail” report. “That doesn’t make sense.”
Details of exact capital requirements have not yet emerged, although Finance Minister Karin Keller-Souter said in April that estimates UBS would require another $15 billion to $25 billion were “reasonable.”
In a separate estimate, analysts at Autonomous Research said UBS may need to hold an additional $10 billion to $15 billion.
Kelleher declined to comment on the numbers, but said excessive capital requirements would hurt competitiveness and lead to less favorable rates on banking products for customers.
“We must focus on more important issues such as liquidity management and, above all, the bank’s full ability to meet its obligations,” Kelleher told the newspaper.
Swiss banks contribute to their role as the world’s largest financial centre, managing about $2.6 trillion in international assets, according to a 2021 study by Deloitte. However, competition is rising from Luxembourg, especially Singapore, which has grown rapidly in recent years.
Experts have warned that UBS – whose balance sheet is twice the size of Switzerland’s annual economic output – would pose severe risks to the Swiss economy if it collapsed.
Kelleher downplayed the risks, saying UBS had “significantly more” capital than similar banks, while the bank’s business model – based on wealth management and the Swiss domestic market – meant it was low risk.
Kelleher, who has been chairman of the board since 2022, said UBS remained committed to Switzerland even if Bern demanded a significant increase in additional capital.
“Although we are a global bank, the core of UBS is our Swiss identity,” he added, adding that there was “no doubt” that the bank would leave its home country.
However, he warned that if the bank was forced to raise its capital levels, it would be harmful for Switzerland.
“If politics forces us to increase our capital significantly, then Switzerland has decided that it no longer wants to become a relevant international financial centre,” Kelleher said.
“I think this cannot be in the country’s interest.”
The former Morgan Stanley executive said he was ready to talk to the government about its proposals.
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