UBS Chair cautions against significant rise in capital requirements

UBS Chairman Colm Kelleher warned on Sunday that Switzerland's plans to tighten capital requirements for the country's biggest banks could risk its position as a global financial hub.

The government earlier this year laid out proposals to strengthen capital requirements at UBS and the country's other three large banks to make the financial sector more sound after Credit Suisse crashed last year.

In an article with the Swiss newspaper SonntagsBlick, Kelleher said he agreed with nearly all of the 22 recommendations contained in the government's report, apart from the recommendation to set up tougher capital requirements.

"What I really have a big problem with is the increase in capital requirements. It just doesn't make sense," he said about the so-called "too-big-to-fail" report.

Details of the precise capital requirements have yet to emerge, but in April, Finance Minister Karin Keller-Sutter commented that estimates of a range suggesting UBS will need another $15 billion to $25 billion were "plausible."

Elsewhere, researchers at Autonomous Research estimate UBS may need to shore up as much as $10 billion to $15 billion.

Kelleher refused to comment on the figures but said that if that level were set at the top end, capital would run too high, a level that would blunt competitiveness and leave clients at the mercy of less advantageous pricing on bank products.

"We should focus on more important issues such as liquidity management and, above all, the full resolvability of a bank," Kelleher told the newspaper.

Swiss banks contribute to the country's role as the world's leading financial centre, at least in international assets under management, with around $2.6 trillion, according to a 2021 Deloitte study. Still, there is very much room for Luxembourg and, above all, for Singapore, whose growth has been extremely rapid.