ZURICH, March 18 (Reuters) - The Swiss National Bank stated on Tuesday that improvements to the regulatory framework for the Swiss banking sector are still necessary following the collapse of Credit Suisse in 2023. This supports government initiatives aimed at enhancing the industry's resilience.
Switzerland has committed to implementing stricter banking regulations following the downfall of Credit Suisse, which was subsequently acquired by its former competitor UBS.
Key proposals by the government include requiring UBS to increase its capital reserves to fortify its financial stability and avoid a recurrence of the Credit Suisse crisis.
The debate on the appropriate level of capital for UBS, particularly for its foreign subsidiaries, remains contentious.
In its latest annual report, the Swiss central bank highlighted deficiencies in UBS's capitalization of its subsidiaries, although acknowledging that UBS's main entity is currently in a stronger capital position than Credit Suisse was before its crisis.
UBS contends that it already maintains strong capital reserves compared to international peers and argues that being compelled to hold additional funds could negatively impact its competitiveness and Switzerland's status as a global financial hub.
The SNB expressed optimism about UBS's assimilation of Credit Suisse, stating that market indicators like credit default swap (CDS) premia and share prices reflect a positive outlook on the combined bank's future.
Additionally, the Swiss central bank underscored the substantial risks posed by the mortgage and real estate markets.