UBS Capital Rules Face Further Swiss Parliamentary Hurdle Amid Reforms
By John Revill
Swiss Lawmakers Debate UBS Capital Requirements and Banking Reforms
ZURICH, Sept 16 (Reuters) - A group of Swiss lawmakers have backed a motion to defer to the government on major new banking rules for UBS ahead of a vote on Thursday in the upper house of parliament on a compromise thrashed out last month on the draft legislation.
Background: Credit Suisse Collapse and UBS Acquisition
The compromise would impose a lower capital burden on UBS than the one sought by Switzerland's governing Federal Council as part of measures to strengthen the country's banks after the 2023 collapse of Credit Suisse, which UBS then acquired.
UBS Concerns Over Government Proposals
UBS says the government plan to make it fully back its foreign units with Common Equity Tier 1 capital is excessive and will put it at a disadvantage to international rivals.
Government's Position on Capital Requirements
The government says its full set of proposals for the banking overhaul would require Switzerland's last remaining global bank to hold an extra $20 billion in CET1 capital.
Parliamentary Compromise and Political Reactions
Upper House Committee's Compromise
Last month, an upper house committee passed a compromise that could let UBS use $13 billion in so-called Additional Tier 1 capital to cover its foreign units.
Support for Returning Legislation to Federal Council
Federal lawmaker Andrea Caroni of Switzerland's centre-right Liberals, or FDP, said colleagues in his parliamentary group decided late on Tuesday to back a motion for parliament to return the banking legislation to the Federal Council.
Caroni's Statement
"The Federal Council is the right body to decide on capital requirements," Caroni told Reuters. "I am counting on a majority of my group and am hopeful the motion will pass."
Potential Impact of the Motion
If successful, the motion would also need to be backed by the lower house of parliament, but it could allow the Federal Council to directly introduce the stricter capital requirements that Swiss Finance Minister Karin Keller-Sutter wants for UBS.
Keller-Sutter's Argument for Stricter Rules
Keller-Sutter, an FDP member, argues the stricter rules are necessary to ensure taxpayers are not on the hook for any future banking collapses following the Credit Suisse meltdown.
Uncertainty Over Parliamentary Outcome
Whether Caroni's motion, which is due to be voted on alongside the AT1 compromise passed by the parliamentary committee, will command a majority in Switzerland's 46-member upper house remains to be seen. The FDP is not united on how best to overhaul the rules for UBS.
Centre Party Perspective
Fabio Regazzi, a member of the Centre party, the biggest parliamentary group in the upper house, described the situation as fluid, saying several potential outcomes are still possible.
(Reporting by John Revill and Dave Graham; Editing by Alexander Smith)
