Financial stability would be best served by UBS fully capitalizing its foreign units, according to Swiss National Bank Vice Chairman Antoine Martin, who emphasized the need for clarity regarding the regulations the nation’s sole global bank faces.
In light of the 2023 collapse of Credit Suisse, the Swiss government is working to strengthen capital requirements for large banks, with an initial proposal expected in May.
UBS's acquisition of Credit Suisse as part of a rescue effort raises questions about how much additional capital it should hold under new regulations, particularly concerning the capital requirements for its foreign subsidiaries.
UBS executives argue that the bank already has sufficient capital and that mandates to reserve more could hinder its operations and Switzerland's status as a financial hub.
After a recent SNB press conference, Martin was questioned about the implications of compelling UBS to fully capitalize its foreign units, specifically whether this might lead the bank to exit Switzerland. He stated that the SNB does not dictate UBS's decisions but is committed to ensuring financial stability.
"From the perspective of financial stability, a complete deduction of foreign participation is the best solution," he remarked, highlighting Switzerland's appeal as a banking destination.
The strictest capitalisation option being considered by Swiss authorities would exclude participations in foreign units from the eligible capital of the parent bank, requiring it to secure its own backing.