Higher capital requirements for UBS will raise costs for others, CEO says

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ZURICH (Reuters) – Imposing higher capital requirements on UBS as a systemically relevant bank will usher in higher costs for companies and households, the Swiss lender’s CEO, Sergio Ermotti, said on Thursday.

Ermotti was speaking at an event in Zurich where he urged authorities currently preparing to overhaul Swiss banking rules to stick closely to the current capital requirements.

The Swiss government has vowed to tighten banking regulations in order to make the sector more robust and avoid the risk of another meltdown of the kind Credit Suisse suffered in 2023, which led to its takeover by longtime rival UBS.

“The fact that with today’s regulation UBS is able to rescue CS (Credit Suisse) shows that the capital strength and regulation is good enough if it’s implemented coherently and also communicated transparently,” Ermotti said.

Given Switzerland’s swift implementation of the Basel III financial stability requirements, UBS was already adhering to some of the strictest capital requirements worldwide, Ermotti told an audience of banking professionals.

Switzerland’s ambition to remain a leading financial centre was incompatible with higher capital requirements for a bank’s subsidiaries abroad, Ermotti said, calling for a cost-benefit analysis and asking to be involved in regulatory discussions.

A study published this month by the University of Bern posited that UBS effectively benefits from a state guarantee that has reduced its costs by billions. Ermotti rejected the report, saying that it was based on data that was out of date.

(Reporting by Ariane Luthi and Oliver Hirt; Editing by Dave Graham)