Banking
Resolvability Key to UBS Capital Requirements, Minister Says
Published by Jessica Weisman-Pitts
Posted on October 31, 2024
3 min readLast updated: January 29, 2026
Add as preferred source on Google
Global Banking & Finance Review®
Company
Published by Jessica Weisman-Pitts
Posted on October 31, 2024
3 min readLast updated: January 29, 2026
Add as preferred source on GoogleZURICH (Reuters) – How much capital UBS needs to hold under new stability measures being considered by Swiss authorities will depend on the resolvability of the bank, Finance Minister Karin Keller-Sutter said on Thursday.
ZURICH (Reuters) – How much capital UBS needs to hold under new stability measures being considered by Swiss authorities will depend on the resolvability of the bank, Finance Minister Karin Keller-Sutter said on Thursday.
UBS is currently waiting to see what rules are adopted under a set of “too big to fail” proposals sketched out by the Swiss government in April, which aim to prevent the kind of banking collapse that brought down Credit Suisse last year.
UBS acquired Credit Suisse after the latter’s demise, creating what critics have called a “monster bank” and putting pressure on the government to ensure it does not fail and hit the economy.
Keller-Sutter said subsidiaries of Credit Suisse in the United States and Britain had been insufficiently capitalized, but that officials were still examining how important capitalization of such units should be in future.
She declined to be drawn on whether the amount of equity banks should back their foreign units with should be nearer to 60% or 100%, speaking in Zurich at a Bloomberg event.
“This depends on the resolvability of UBS specifically because we’re talking about UBS,” she said.
“And you have to look at the whole package because there are also progressive components of capital requirements, which will rise because of the size of the bank. There will be other capital requirements, for instance, followed by stress tests.”
Shortly afterwards, she added: “But I must also say that we are catching up with foreign jurisdictions because they have more than 60% in other jurisdictions.”
If there were another crisis, it would be about liquidity, the minister said.
UBS has pushed back against the prospect of higher capital requirements, arguing it could hurt business.
In the end, a balance is needed to be struck between ensuring the competitiveness of the financial sector and stability, Keller-Sutter said. She said she did not think authorities should interfere in setting salaries when asked about criticism she herself had voiced against UBS executive pay levels.
The minister said the government did, however, believe in creating scope for clawbacks on compensation and that if limiting bankers’ pay ever was put to a referendum under the Swiss system of direct democracy that it would likely pass.
Keller-Sutter said she did not rule out the possibility of financial market regulator FINMA being given the authority to impose fines on banks, noting that fines and introducing a so-called senior manager regime are “very popular” in parliament.
(Reporting by Dave Graham, editing by John Revill and Susan Fenton)
Capital requirements are regulations that determine the minimum amount of capital a bank must hold to ensure stability and solvency, protecting depositors and the financial system.
Resolvability refers to a bank's ability to be restructured or liquidated without causing significant disruption to the financial system, ensuring that it can fail without taxpayer bailouts.
Stress tests are simulations conducted to assess a bank's ability to withstand economic shocks, helping regulators ensure that financial institutions are resilient during crises.
Financial stability is a condition in which the financial system operates effectively, maintaining confidence in financial institutions and markets, and avoiding systemic crises.
Executive compensation refers to the financial remuneration provided to top management in a company, which can include salaries, bonuses, and stock options.
Explore more articles in the Banking category
