UBS chairman warns against big increase in capital requirements, newspaper reports

ZURICH (Reuters) – UBS Chairman Colm Kelleher warned on Sunday that the Swiss government’s plans to strengthen capital requirements for big banks could damage the country’s position as a financial centre.

The government earlier this year unveiled plans for tighter capital requirements for UBS and Switzerland’s three other big banks in a bid to shore up the financial sector after the collapse of Credit Suisse last year.

In an article published in the Swiss newspaper SonntagsBlick, Kelleher said he agreed with most of the 22 recommendations in the government report, except for the proposal for stricter capital requirements.

“What I really have a big problem with is the increase in capital requirements. It just doesn’t make sense,” he said of the so-called “too big to fail” ratio.

Details of the exact capital requirements have not yet emerged, although Finance Minister Karin Keller-Sutter said in April that UBS’s estimates of needing an additional $15-25 billion were “plausible”.

In a separate estimate, analysts at Autonomous Research said UBS may need to retain another $10 billion to $15 billion.

Kelleher declined to comment on the numbers, but said excessive capital requirements would hurt competitiveness and lead to less favorable pricing of banking products for customers.

“We should focus on more important issues such as liquidity management and, above all, the full solvency of a bank,” Kelleher told the paper.

Swiss banks contribute to its role as the world’s leading financial center, with around $2.6 trillion in international assets under management, according to a 2021 Deloitte study. However, competition is growing from Luxembourg and especially Singapore , which has grown rapidly in recent years.

UBS – which has a balance sheet twice the size of Switzerland’s annual economic output – would pose serious risks to the Swiss economy if it collapsed, experts warned.

Kelleher downplayed the dangers, saying UBS held “significantly more” capital than comparable banks, while the bank’s business model – based on wealth management and the Swiss domestic market – meant it was low risk.

UBS has remained committed to Switzerland even though Bern has requested a large additional capital raise, said Kelleher, who is chairman from 2022.

“Although we are a global bank, the heart of UBS is our Switzerland,” he said, adding that there was “no doubt” the lender would leave its home country.

However, he warned that if the bank were to raise its capital level, it would be to Switzerland’s detriment.

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“If politics forces us to massively increase our capital, then Switzerland has decided that it no longer wants to be a relevant international financial center,” Kelleher said.

“I think this cannot be in the interest of the country.”

The former Morgan Stanley executive said he was ready to talk to the government about its proposals.

(Reporting by John Revill; Additional reporting by Emma Farge; Editing by Clelia Oziel)