Swiss bankers flag concerns over plans for tougher capital rules

By John Revill and Oliver Hirt

ZURICH (Reuters) - The Swiss Bankers Association on Thursday criticised government plans for tougher capital requirements on UBS following the 2023 collapse of Credit Suisse, saying the measures could hurt the competitiveness of the country's financial sector.

The Swiss government in April laid out plans for stricter capital requirements for UBS and also Switzerland's three other big banks to try to make the country's financial sector more robust.

But the SBA has stated that existing capital requirements for systemically important Swiss banks - which include UBS - are sufficient.

The SBA said it supported targeted measures to improve the stability of the Swiss financial system, but fundamental principles and proportionality should be taken into account.

"We are very critical of some of the measures as a whole and in total," the SBA said in a statement. "Firstly, the measures on equity capital must be assessed in their entirety, and must not needlessly restrict competitiveness."

The government proposals include strengthening capital requirements for banks' foreign subsidiaries.

The SBA said that while this could create more room to manoeuvre in a crisis, it could also put banks at a disadvantage. As a result, those effects needed to be carefully "calibrated", it said.

How much additional capital UBS might need to hold remains unclear. The government has indicated the sum might lie somewhere between $15 billion and $25 billion.

UBS has been arguing against higher capital requirements, with Chairman Colm Kelleher last month saying such a move could damage Switzerland's position as a financial centre.

Switzerland aims to put the measures into effect quickly and present two packages for implementation in the first half of 2025. The SBA is taking part in a consultation process with the government on the measures.

In its assessment of the plans, the SBA also said proposals to expand the powers of Swiss financial regulator FINMA, including giving it the power to impose fines and intervene early in banks, needed to face "critical scrutiny".

(Reporting by John Revill and Oliver Hirt. Editing by Jane Merriman)

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