Swiss Parliament Considers New UBS Capital Rules Following Credit Suisse Crisis
Swiss Lawmakers Debate Stricter Banking Regulations for UBS
Background: Credit Suisse Collapse Spurs Regulatory Response
ZURICH, Aug 11 (Reuters) - A Swiss parliamentary committee will meet on Tuesday to discuss planned new banking regulations for UBS, amid a push by some lawmakers to temper tougher rules drafted by the government after the demise of Credit Suisse.
Proposed Capital Requirements
The draft bill envisages making the bank carry some $20 billion in additional Common Equity Tier-1 capital in order to avert another meltdown and protect taxpayers.
UBS Concerns Over Competitive Position
But UBS, which acquired its old rival Credit Suisse after its 2023 collapse, argues the burden is excessive, would weaken its competitive position and hurt Swiss banking.
Parliamentary Committee Deliberations
The bill is being debated by the economic affairs and taxation committee of parliament's upper house, where lawmakers who worry it is too onerous have pitched amendments to ease the capital burden on Zurich-based UBS.
Emerging Compromise
A compromise was emerging that was likely to give UBS more room to breathe on capital, said Hannes Germann, a committee member from the conservative Swiss People's Party.
Risk and Business Considerations
"Without some risk, there's no business," he said, but added that it was too early to say if a deal would be struck on Tuesday.
Details of the Capital Debate
Much of the extra burden centres on the government's desire for UBS to 100% capitalise its foreign units, up from 60% now, and that CET1 capital alone should cover that requirement. At present, it can be partly met by cheaper alternatives.
Alternative Capital Instruments
A compromise under discussion is to let UBS use so-called Additional Tier 1 capital to cover part of the burden. Less expensive to hold than CET1, AT1 debt is designed to absorb losses during crises, but also deemed less secure by regulators.
Lawmakers Seek Balanced Solution
Thierry Burkart, a lawmaker of the centre-right Liberals, or FDP, who proposed enabling UBS to partly back the foreign units with AT1 capital, said he believed an agreement could be reached that balanced the bank's concerns and risks to taxpayers.
"There will be adjustments on both sides, and perhaps a compromise can be found," he said, adding that it might involve legislating to make AT1 bonds more secure.
Reporting and Editing
(Reporting by Dave Graham; Editing by Clarence Fernandez)