**UBS Warns of Serious Impacts from Proposed Capital Requirements**
ZURICH, Feb 6 – UBS could face significant challenges and may need to reevaluate its strategic approach if Swiss regulations mandate an additional 25 billion Swiss francs ($27.69 billion) in capital reserves, according to Chief Compliance and Governance Officer Markus Ronner. In light of the 2023 financial crisis, which resulted in the downfall of Credit Suisse and its subsequent acquisition by UBS, the Swiss government is contemplating stricter capital requirements for major banks.
UBS has been actively opposing these heightened capital demands, arguing that they would adversely affect the Swiss economy, the financial sector, and the bank itself. Ronner emphasized that UBS is already among the best-capitalized banks globally and has had to maintain an additional $17 billion to $19 billion in capital due to the Credit Suisse acquisition.
“If another 25 billion were added, we would be discussing over 40 billion in additional capital,” Ronner stated in an interview with a Swiss news outlet. He noted that equity capital is relatively costly, estimating around 10% in expenses, which translates to an additional 1 billion francs in annual costs for every 10 billion francs of capital.
This “extreme requirement” would necessitate UBS to maintain 17% to 19% in hard equity, which is approximately 50% more than current Swiss regulations and significantly higher than the standards set for international competitors. Ronner argued that such a scenario would severely undermine UBS’s competitiveness and jeopardize its sustainable, profitable business model.
He also warned that the bank would become less attractive to investors and customers, with increased costs leading to a substantial decline in profits. Instead of focusing on higher capital requirements, Ronner suggested that the discussion around banking regulations should prioritize improved governance and timely interventions by authorities. He expressed concern that an excessive capital surplus, resulting from extreme demands, could create a false sense of security and potentially hinder the bank and regulatory bodies from taking necessary actions in a timely manner.
