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Miami Herald
4 days ago
- Business
- Miami Herald
Swiss government proposes requiring banks to hold more capital
June 6 (UPI) -- Switzerland's Federal Council Friday submitted new capital requirements for mega-banks like UBS in the wake of the Credit Suisse crisis. It requires UBS to hold $26 billion more in core capital. The Swiss Federal Council said in a statement that a review of the Credit Suisse crisis showed reforms are needed to reduce risks for the state, taxpayers and the economy. "These include stricter capital requirements for systemically important banks with foreign subsidiaries, additional requirements on the recovery and resolution of systemically important banks, the introduction of a senior managers regime for banks and additional powers for the Swiss Financial Market Supervisory Authority (FINMA)," the Federal Council statement said. The council is proposing amendments to the Banking Act in the wake of the Credit Suisse crisis that led to the UBS/CS merger. The Swiss National Bank supported the proposed amendments. "The Swiss National Bank supports the amendments at legislative and ordinance level planned by the Federal Council in the areas of capital and liquidity requirements for systemically important banks, early intervention, and recovery and resolution planning. The measures planned are key to strengthening banks' resilience and their resolvability in a crisis, and thus the stability of the financial system." "The crisis at Credit Suisse highlighted weaknesses in the regulatory framework. The regulatory adjustments now planned constitute a package of measures drawing the right lessons from this crisis." One major concern about UBS is its ability to cope with losses in its foreign units, and that's one of the reasons the Swiss government is increasing capital requirements. FINMA said it also backs the proposed changes ot the Banking Act. "FINMA welcomes the planned introduction of several preventive and disciplinary instruments that will set the right incentives for supervised institutions and thus make a decisive contribution to reducing the likelihood of crises and resolution occurring in the Swiss banking centre." FINMA said in particular, it supports, "the planned new statutory powers for FINMA in the areas of corporate governance, early intervention, recovery and resolution, as well as the introduction of higher capital requirements for systemically important banks with subsidiaries abroad." Morningstar senior equity analyst Johann Scholtz said in a note, "While winding down Credit Suisse's legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands." The new capital rules would require UBS to fully capitalize its foreign branches and do fewer stock buybacks. UBS took over Credit Suisse in 2023, with the government underwriting $10 billion in UBS losses created by the takeover. Copyright 2025 UPI News Corporation. All Rights Reserved.
UPI
4 days ago
- Business
- UPI
Swiss government proposes requiring banks to hold more capital
Switzerland's Federal Council Friday submitted new capital requirements for mega-banks like UBS in the wake of the Credit Suisse crisis. It requires UBS to hold $26 billion more in core capital. The Swiss National Bank and financial regulator FINMA both backed the proposed capital requirement changes. Photo by Hugo Philpott/UPI | License Photo June 6 (UPI) -- Switzerland's Federal Council Friday submitted new capital requirements for mega-banks like UBS in the wake of the Credit Suisse crisis. It requires UBS to hold $26 billion more in core capital. The Swiss Federal Council said in a statement that a review of the Credit Suisse crisis showed reforms are needed to reduce risks for the state, taxpayers and the economy. "These include stricter capital requirements for systemically important banks with foreign subsidiaries, additional requirements on the recovery and resolution of systemically important banks, the introduction of a senior managers regime for banks and additional powers for the Swiss Financial Market Supervisory Authority (FINMA)," the Federal Council statement said. The council is proposing amendments to the Banking Act in the wake of the Credit Suisse crisis that led to the UBS/CS merger. The Swiss National Bank supported the proposed amendments. "The Swiss National Bank supports the amendments at legislative and ordinance level planned by the Federal Council in the areas of capital and liquidity requirements for systemically important banks, early intervention, and recovery and resolution planning. The measures planned are key to strengthening banks' resilience and their resolvability in a crisis, and thus the stability of the financial system." "The crisis at Credit Suisse highlighted weaknesses in the regulatory framework. The regulatory adjustments now planned constitute a package of measures drawing the right lessons from this crisis." One major concern about UBS is its ability to cope with losses in its foreign units, and that's one of the reasons the Swiss government is increasing capital requirements. FINMA said it also backs the proposed changes ot the Banking Act. "FINMA welcomes the planned introduction of several preventive and disciplinary instruments that will set the right incentives for supervised institutions and thus make a decisive contribution to reducing the likelihood of crises and resolution occurring in the Swiss banking centre." FINMA said in particular, it supports, "the planned new statutory powers for FINMA in the areas of corporate governance, early intervention, recovery and resolution, as well as the introduction of higher capital requirements for systemically important banks with subsidiaries abroad." Morningstar senior equity analyst Johann Scholtz said in a note, "While winding down Credit Suisse's legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands." The new capital rules would require UBS to fully capitalize its foreign branches and do fewer stock buybacks. UBS took over Credit Suisse in 2023, with the government underwriting $10 billion in UBS losses created by the takeover.
Reuters
4 days ago
- Business
- Reuters
Swiss bank regulator pleased with plan to hand it stronger powers
ZURICH, June 6 (Reuters) - Swiss financial market supervisor FINMA welcomed proposals announced by the government on Friday to give it stronger powers to regulate the financial industry. Among the proposals was a senior managers regime, to hold executives to account for their actions and claw back bonuses in the case of misconduct, as well as giving FINMA the ability to fine offending institutions. "FINMA welcomes the planned introduction of several preventive and disciplinary instruments that will set the right incentives for supervised institutions," it said. The proposals would "make a decisive contribution to reducing the likelihood of crises and resolution occurring in the Swiss banking centre," it added. FINMA, which has come under fire for its handling of Credit Suisse in the run up to the bank's collapse, has been calling for stronger powers since the crisis in 2023. The body also said it was pleased with the government's proposal for banks to increase their plans for recovery and resolution in future. "The range of crisis instruments will be expanded, giving FINMA the power to order measures to remedy deficiencies in recovery planning," it said.
CNBC
4 days ago
- Business
- CNBC
Swiss government proposes tough new capital rules in major blow to UBS
The Swiss government on Friday proposed strict new capital regulations on banking giant UBS following its 2023 takeover of stricken rival Credit Suisse. The measures could mean that UBS will need to hold an additional $26 billion in core capital and carry out fewer share buybacks. "The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion," the government said in a Friday statement, referring to UBS' holding of Additional Tier 1 (AT1) bonds. UBS has been battling the specter of tighter capital rules since acquiring the country's second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse. The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention. Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank's balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not "too big to fail" and that the additional capital requirements — set to drain its cash liquidity — will impact the bank's competitiveness. At the heart of the standoff are pressing concerns over UBS' ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank. Higher capital requirements can whittle down a bank's balance sheet and credit supply by bolstering a lender's funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments. "While winding down Credit Suisse's legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands," Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement. "Such measures may place UBS's capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated." The prospect of stringent Swiss capital rules and UBS' extensive U.S. presence through its core global wealth management division comes as White House trade tariffs already weigh on the bank's fortunes. In a dramatic twist, the bank lost its crown as continental Europe's most valuable lender by market capitalization to Spanish giant Santander in mid-April.
Reuters
02-06-2025
- Business
- Reuters
Law firm challenges Swiss court over delay in Credit Suisse AT1 write-down case, filing shows
LONDON, June 2 (Reuters) - A Zurich-based law firm has filed a complaint with the Swiss Federal Supreme Court challenging a tribunal's delay in addressing investors' claim on the write-down of Credit Suisse bonds, a legal filing seen by Reuters shows. Hundreds of bondholders in April 2023 sued market regulator FINMA at the Swiss administrative court in St. Gallen to recoup losses on 16 billion Swiss francs ($19.4 billion) of AT1 bonds that were written down when UBS (UBSG.S), opens new tab rescued Credit Suisse. There has been no significant activity by the Federal Administrative Court since spring 2024, the filing, submitted in German, shows. A spokesperson for the Federal Supreme Court confirmed that the court had received the complaint. The complaint was filed by Zurich-based law firm grosz I poledna, acting for Pallas, the law firm representing the investors, around mid-May, according to a person familiar with the proceedings. Pallas represents about 800 clients who at the time of the write-down held around $2 billion of Credit Suisse AT1 bonds, a representative for the law firm told Reuters. Pallas declined to comment for the story. A representative for Switzerland's Federal Administrative court in St. Gallen said: "The proceedings are particularly challenging due to their scope, the high number of parties and the complexity of the legal issues involved, and entail many procedural steps. This is a multi-party procedure, whereby it must also be ensured that all complainants or their legal representatives are granted the right to be heard. We treat the proceedings as a priority." A spokesperson for FINMA declined to comment. While questions of an administrative nature were clarified between the second half of 2023 and spring 2024, according to the filing, there have been no "discernible activities" by the Federal Administrative Court, the filing shows. "While this case is unprecedented for the Swiss courts as there have never been so many appellants challenging one FINMA order, by now it should have progressed as appellants have a right to have their case looked at expeditiously," said Jonas Hertner, a Zurich-based lawyer who had previously represented Credit Suisse AT1 clients at law firm Quinn Emanuel. The Swiss Federal Supreme Court is the head of the Swiss judiciary system and appellants can file complaints to pressure the administrative court to act. There is no deadline by which the Supreme Court is required to respond, but complaints of this kind could take a few months, according to lawyers. In October 2023, Reuters reported that the St. Gallen administrative tribunal was weighing whether to grant Credit Suisse investors access to more documents. Back then, some investors had hoped to gain access to filings in a matter of weeks. The documents, including the responses to the appeal by Credit Suisse and FINMA, have not yet been made public, according to the complaint. The write-down shocked markets and upended a long-established practice of granting bondholders' priority over shareholders in a debt recovery. The market has since recovered with UBS tapping the AT1 market after the Credit Suisse rescue. ($1 = 0.8241 Swiss francs)
