Finance
Shaken by crises, Switzerland fetters UBS's global dream
Published by Global Banking & Finance Review®
Posted on June 6, 2025
4 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on June 6, 2025
4 min readLast updated: January 23, 2026
Switzerland's new reforms aim to curb UBS's global growth, requiring more capital for foreign operations, impacting its competitive edge.
By Ariane Luthi and John O'Donnell
BERN (Reuters) -Switzerland announced reforms on Friday to make its biggest bank UBS safer and avoid another crisis, hampering the global ambitions of a lender whose financial weight eclipses the country's economy.
UBS emerged as Switzerland's sole global bank more than two years ago after the government hastily arranged its rescue of scandal-hit Credit Suisse to prevent a disorderly collapse.
The demise of Credit Suisse, one of the world's biggest banks, rattled global markets and blindsided officials and regulators, whose struggle to steer the lender as it lurched from one scandal to the next underscored their weakness.
On Friday, speaking from the same podium where she had announced the Credit Suisse rescue in 2023 as finance minister, Switzerland's president Karin Keller-Sutter delivered a firm message. The country would not be wrongfooted again.
"I don't believe that the competitiveness will be impaired, but it is true that growth abroad will become more expensive," Keller-Sutter said of UBS.
"We've had two crises. 2008 and 2023," she said. "If you see something that is broken, you have to fix it."
During the global financial crisis of 2008, UBS was hit by a losses in subprime debt, as a disastrous expansion into riskier investment banking forced it to write down tens of billions of dollars and ultimately turn to the state for help.
Memories of that crisis also linger, reinforcing the government's resolve after the collapse of Credit Suisse.
For UBS, which has a financial balance sheet of around $1.7 trillion, far bigger than the Swiss economy, the implications of the reforms proposed on Friday are clear. Switzerland no longer wants to back its international growth.
"Bottom line: who is carrying the risk for growth abroad?" said Keller-Sutter. "The bank, its owners or the state?"
The rules the government proposed demand that UBS in Switzerland holds more capital to cover risks in its foreign operations.
That move, one of the most important steps taken by the Swiss in a series of otherwise piecemeal measures, will make UBS's businesses abroad more expensive to run for one of the globe's largest banks for millionaires and billionaires.
Following publication of the reform plans, UBS Chairman Colm Kelleher and CEO Sergio Ermotti said in an internal memo that if fully implemented, they would undermine the bank's "global competitive footprint" and hurt the Swiss economy.
STRATEGY
The reform would require UBS to hold as much as $26 billion in extra capital.
Some believe the demands may alter the bank's course.
"It could be that UBS has to change its strategy of growth in the United States and Asia," said Andreas Venditti, an analyst at Vontobel.
"It's not just growing. It makes the existing business more expensive. It is an incentive to get smaller and this will most likely happen."
Credit Suisse's demise exploded the myth of invincibility of one of the wealthiest countries in the world, home to a global reserve currency, and proved as unworkable a central reform of the financial crisis to prevent state bailouts.
For many in Switzerland, the government's reforms are long overdue.
"The bank is bigger than the entire Swiss economy. It makes sense that it should not grow even bigger," said Andreas Missbach of Alliance Sud, a group that campaigns for transparency.
"It is good that the government did not give in to lobbying by UBS. The question is whether it is enough. We have a banking crisis roughly every 12 years. So I'm not really put at ease."
UBS CEO Ermotti had lobbied against the reforms, arguing that a heavy capital burden would put the bank on the back foot with rivals.
The world's second-largest wealth manager after Morgan Stanley is dwarfed by its U.S. peer. Morgan Stanley shares value the firm at twice its book value, compared with UBS's 20% premium to book.
On Friday, the bank reiterated this message, saying that it strongly disagreed with the "extreme" increase in capital.
But others are sceptical that the government has done enough.
Hans Gersbach, a professor at ETH Zurich, said there was still no proper plan to cope should UBS run into trouble.
"The credibility of the too big to fail regime remains in question."
(Additional reporting by Dave Graham and Oliver Hirt in Zurich; Writing By John O'Donnell; editing by David Evans)
Switzerland proposed reforms requiring UBS to hold more capital to cover risks in its foreign operations, aiming to make the bank safer and avoid future crises.
The reforms could make UBS's businesses abroad more expensive to run, potentially altering its strategy for growth in the United States and Asia.
The collapse of Credit Suisse rattled global markets and reinforced the Swiss government's resolve to implement reforms to prevent similar crises in the future.
Analysts express concerns that the increased capital requirements could hinder UBS's competitiveness and lead to a strategy shift towards downsizing.
UBS's financial balance sheet is around $1.7 trillion, which is significantly larger than the entire Swiss economy, raising concerns about its growth and risk management.
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