(Bloomberg) — In the year since Stefan Walter has been in charge of Switzerland’s financial regulator, he’s made a name for himself among the bankers he oversees. They call him “The Sheriff.” Walter, 60, a German citizen with decades of experience in top-level regulation including in the US, is using a tumultuous period in Swiss finance to establish a forthright, public presence for Finma that few in Zurich or Geneva are accustomed to. Under his watch, Finma has communicated penalties or investigations against seven banks and fintech firms, including Julius Baer Group Ltd, using the limited powers that the body has to the full. Most conspicuously, he’s publicly pushed for the strictest possible stance on the future capital requirements for UBS Group AG, facing off against the bank in a showdown where the stakes are rising rapidly. Executives at the global wealth manager in Zurich are even exploring whether the full introduction of the higher requirement could compel them to move their headquarters out of the country altogether, Bloomberg has reported. In interviews with more than a dozen executives and officials, a picture of a regulator emerges who is bent on disrupting the cozy, consensual atmosphere between Switzerland’s financial firms and their watchdog that characterized the years leading up to Credit Suisse’s collapse in 2023. Walter’s sometimes-abrupt manner and unexpected demands raised laughs at first among some bankers more used to Swiss politeness — but he now inspires a combination of animosity and respect. “I’m not Swiss, and I’m learning about the context here,” he told Bloomberg in an interview at Finma’s offices in Zurich on March 17. “It’s a consensus-based country and trying to get the right balance between coming from the outside and having certain perspectives, and understanding how things are going here, is something that I’m still finding my way in.” UBS Fight UBS is facing an increase in capital requirements of as much as $25 billion, if Walter gets his way in a revamp of the country’s financial regulation led by Finance Minister Karin Keller-Sutter after the demise of Credit Suisse. His push centers around the capitalization of UBS’s foreign units, which, according to Finma and the Swiss National Bank, ought to be backed 100% by equity of the parent bank. UBS, which bought its rival for just $3 billion two years ago, has said that this is an overreaction to the crisis at its former rival, and is lobbying strongly against it. But a larger issue is also at stake. Switzerland’s status as a safe haven for the world’s wealthy has been called into question by the Credit Suisse crisis, and politicians also worry that the new combined bank is simply too large — twice the size of the domestic economy. Current geopolitical turmoil and gyrating markets should put a premium on Swiss experience in managing money — yet the financial center is at risk of losing
Switzerland’s financial authority is challenging UBS and the country’s banking leaders.
