UBS Warns Swiss Lawmakers Against 'Excessive' Capital Rules

Swiss lawmakers are set to vote on new capital rules for UBS, which acquired its troubled rival Credit Suisse in an emergency takeover last year. The proposed regulations would require UBS to hold about $20 billion in additional capital, with the aim of strengthening the bank's ability to absorb losses and reduce the burden on taxpayers.

However, UBS CEO Sergio Ermotti has warned that excessively stringent capital requirements could weaken the bank's competitiveness and ultimately impose costs on customers and employees. He rejected the government's proposal to require the bank to back its foreign subsidiaries with 100% Common Equity Tier 1 capital, saying it would be 'painful but manageable' for the bank if they were required to hold half of that amount in Additional Tier 1 capital.

Ermotti also argued that Swiss regulators and policymakers should examine their own role in the Credit Suisse failure. He suggested that the Swiss Financial Market Supervisory Authority, known as FINMA, and the Swiss National Bank bore some responsibility for the bank's demise.