UBS capital rules could hurt Swiss economy, bank-commissioned study finds

ZURICH, April 17 (Reuters) - ‌Capital requirements ​proposed ​by the Swiss government for UBS could have a sustained drag ‌on Switzerland's economy, a study commissioned by ⁠the bank found, as a showdown over banking ‌regulation intensifies.

Switzerland is tightening ‌banking rules to bolster financial stability after Credit Suisse collapsed in 2023 and ​was taken over by UBS in a state-engineered rescue.

A government proposal requiring the ⁠banking giant to fully back its foreign units with Common ​Equity Tier 1 capital could reduce Switzerland's annual gross domestic product by ​1.3% to 3.9% over ‌10 years, consultancy BAK Economics said in the report.

The authors said ⁠UBS defined the topic of the study, while the research was conducted independently by BAK ⁠Economics, based on scenarios of a regulatory-driven credit contraction ​and simulations of knock-on effects on the real economy.

An earlier cost-benefit analysis of proposed UBS regulation ‌commissioned by the Swiss government found that stricter capital requirements would ‌increase the resilience of banks, reduce moral ⁠hazard and enable ‌better loss absorption ​in the event of a crisis.

(Reporting by Ariane Luthi. Editing by Mark ‌Potter)

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