ZURICH (Reuters) – Financial stability would be best served by UBS fully capitalising its foreign units, Swiss National Bank Vice Chairman Antoine Martin said on Thursday, weighing in on a debate that has fed uncertainty about the rules the nation’s sole global bank faces.
In response to the 2023 collapse of Credit Suisse, the Swiss government is moving to strengthen capital requirements for big banks and is due to release a first proposal in May.
UBS took over Credit Suisse as part of its rescue and the question of how much extra capital it should hold under new rules centres on how well capitalised its foreign subsidiaries must be.
UBS executives argue the bank has already sufficient capital and requiring it to set aside more will hold back its business and Switzerland as a financial centre.
Addressing journalists after the SNB’s latest monetary policy decision, Martin was asked whether forcing UBS to fully capitalise its foreign units could make the bank leave Switzerland.
He said it was not for the SNB to comment on what UBS could do, but that the central bank did have a mandate to serve financial stability.
“From the perspective of financial stability, a complete deduction of foreign participation is the best solution,” he said, noting Switzerland was an attractive place for banks.
The strictest capitalisation option under consideration by Swiss authorities is to no longer count participations in foreign units at all toward the eligible capital of the parent bank, which must then come up with its own backing.
(Reporting by Ariane Luthi. Editing by John Revill and Tomasz Janowski)
