ZURICH, Sept 20 (Reuters) – UBS Chief Govt Sergio Ermotti warned lawmakers towards imposing excessively strict capital necessities on the Swiss financial institution in an interview revealed on Sunday, days earlier than a key parliamentary vote.
Switzerland’s higher home of parliament is because of resolve on Wednesday how stringent new capital guidelines being drawn up for UBS after the 2023 collapse of Credit score Suisse needs to be.
UBS subsequently acquired its stricken rival in an emergency takeover engineered by Swiss authorities.
The federal government says more durable regulation is required to guard taxpayers from one other disaster, and has pitched proposals it says would require UBS to carry an additional $20 billion in capital.
Ermotti informed the Neue Zuercher Zeitung newspaper UBS might settle for some tightening of the principles however mentioned the federal government’s plan to make the financial institution again its international items with 100% Widespread Fairness Tier 1 capital is extreme.
“It is a mistake to consider the extra prices will solely be borne by shareholders,” Ermotti mentioned. “Prospects and workers might be affected, too.”
Final month an higher home committee agreed a compromise that will enable UBS to fulfill half the international items requirement with cheaper Further Tier 1 capital. UBS calculates it could want to search out $13 billion in AT1 capital for that possibility.
Ermotti mentioned this is able to be painful for the financial institution, however doable.
Throughout an higher home debate on Thursday there have been indicators that some lawmakers are leaning in direction of a separate compromise that will make UBS cowl its international items with 90% CET1 capital, which might be significantly dearer for the financial institution.
That possibility went too far, Ermotti mentioned.
“We will stay with a black eye, however two black eyes and a damaged nostril is an excessive amount of. But that is precisely what the demand for capital backing of 90% or 100% comes right down to,” he mentioned.
His remarks got here after UBS Chairman Colm Kelleher mentioned the financial institution would want to contemplate its future in Switzerland fastidiously if the brand new ‌guidelines ended up so strict that it can’t compete.
Ermotti additionally mentioned Swiss monetary regulator FINMA and the Swiss Nationwide Financial institution bore some accountability for Credit score Suisse’s demise. Neither instantly responded to requests for remark.
(Reporting by Oliver Hirt Modifying by Dave Graham and Nick Zieminski)