By Ariane Luthi and Dave Graham
ZURICH (Reuters) – A likely delay in tougher new capital rules for UBS has fed uncertainty about the outlook for the Swiss bank but also paused potentially onerous burdens as the Trump White House’s drive to deregulate puts U.S. business rivals on the back foot.
Swiss authorities vowed to make the country’s banking sector more robust after the 2023 meltdown of Credit Suisse led to its takeover by UBS, creating an outsize lender that critics felt would have the power to upend the economy if it, too, crumbled.
The finance ministry said on Wednesday it wanted parliament, rather than the government alone, to decide how well capitalised UBS’s foreign subsidiaries must be, a question which goes to the heart of how many billions of dollars more the bank will need to hold.
The change in procedure could delay a final decision on the key metric to at least 2028, the ministry said, at a time when other major banking centres are talking about loosening rules more than a decade and a half after the global financial crisis.
“The uncertainty will last longer, which can’t be good for UBS,” said Vontobel analyst Andreas Venditti. “Their peers don’t have this uncertainty, as regulatory discussions in the U.S., UK and EU are going in the opposite direction.”
UBS shares fell on Thursday by more than 1.5%, underperforming the European banking sector. Overall, though, they are up 80% since the lender bought competitor Credit Suisse.
Swiss plans centre on making UBS hold more capital, but after indicating last April a possible sum between $15 billion and $25 billion, officials have proceeded slowly and pointed to the need to keep an eye on what the United States does.
Beat Flach, a lawmaker who sat on the parliamentary committee that investigated the Credit Suisse demise, said the government wanted to pressure lawmakers to take responsibility for the new rules – but also to avoid saddling UBS with tough regulations just as rivals loosened them.
“We don’t want to be the strictest of the strict in an international market,” he told Reuters. “If we’re too quick, it’s not good, but it’s also not good if we’re too slow. It’s like they’re driving with the handbrake on.”
The shift in the capital requirement procedure would bring it into line with the rest of Switzerland’s so-called “too-big-to-fail” banking rules which must also pass through parliament.
Eva Herzog, a member of the upper house committee in charge of banking regulation, said it made sense to discuss the capital requirement together with the other banking measures, but added: “The negative point is that everything takes so long.”