Latest news with #Keller-Sutter
Yahoo
2 days ago
- Business
- Yahoo
Analysis-Shaken by crises, Switzerland fetters UBS's global dream
By Ariane Luthi and John O'Donnell BERN (Reuters) -Switzerland announced reforms on Friday to make its biggest bank UBS safer and avoid another crisis, hampering the global ambitions of a lender whose financial weight eclipses the country's economy. UBS emerged as Switzerland's sole global bank more than two years ago after the government hastily arranged its rescue of scandal-hit Credit Suisse to prevent a disorderly collapse. The demise of Credit Suisse, one of the world's biggest banks, rattled global markets and blindsided officials and regulators, whose struggle to steer the lender as it lurched from one scandal to the next underscored their weakness. On Friday, speaking from the same podium where she had announced the Credit Suisse rescue in 2023 as finance minister, Switzerland's president Karin Keller-Sutter delivered a firm message. The country would not be wrongfooted again. "I don't believe that the competitiveness will be impaired, but it is true that growth abroad will become more expensive," Keller-Sutter said of UBS. "We've had two crises. 2008 and 2023," she said. "If you see something that is broken, you have to fix it." During the global financial crisis of 2008, UBS was hit by a losses in subprime debt, as a disastrous expansion into riskier investment banking forced it to write down tens of billions of dollars and ultimately turn to the state for help. Memories of that crisis also linger, reinforcing the government's resolve after the collapse of Credit Suisse. For UBS, which has a financial balance sheet of around $1.7 trillion, far bigger than the Swiss economy, the implications of the reforms proposed on Friday are clear. Switzerland no longer wants to back its international growth. "Bottom line: who is carrying the risk for growth abroad?" said Keller-Sutter. "The bank, its owners or the state?" The rules the government proposed demand that UBS in Switzerland holds more capital to cover risks in its foreign operations. That move, one of the most important steps taken by the Swiss in a series of otherwise piecemeal measures, will make UBS's businesses abroad more expensive to run for one of the globe's largest banks for millionaires and billionaires. Following publication of the reform plans, UBS Chairman Colm Kelleher and CEO Sergio Ermotti said in an internal memo that if fully implemented, they would undermine the bank's "global competitive footprint" and hurt the Swiss economy. STRATEGY The reform would require UBS to hold as much as $26 billion in extra capital. Some believe the demands may alter the bank's course. "It could be that UBS has to change its strategy of growth in the United States and Asia," said Andreas Venditti, an analyst at Vontobel. "It's not just growing. It makes the existing business more expensive. It is an incentive to get smaller and this will most likely happen." Credit Suisse's demise exploded the myth of invincibility of one of the wealthiest countries in the world, home to a global reserve currency, and proved as unworkable a central reform of the financial crisis to prevent state bailouts. For many in Switzerland, the government's reforms are long overdue. "The bank is bigger than the entire Swiss economy. It makes sense that it should not grow even bigger," said Andreas Missbach of Alliance Sud, a group that campaigns for transparency. "It is good that the government did not give in to lobbying by UBS. The question is whether it is enough. We have a banking crisis roughly every 12 years. So I'm not really put at ease." UBS CEO Ermotti had lobbied against the reforms, arguing that a heavy capital burden would put the bank on the back foot with rivals. The world's second-largest wealth manager after Morgan Stanley is dwarfed by its U.S. peer. Morgan Stanley shares value the firm at twice its book value, compared with UBS's 20% premium to book. On Friday, the bank reiterated this message, saying that it strongly disagreed with the "extreme" increase in capital. But others are sceptical that the government has done enough. Hans Gersbach, a professor at ETH Zurich, said there was still no proper plan to cope should UBS run into trouble. "The credibility of the too big to fail regime remains in question." (Additional reporting by Dave Graham and Oliver Hirt in Zurich; Writing By John O'Donnell; editing by David Evans)
Yahoo
2 days ago
- Business
- Yahoo
Analysis-Shaken by crises, Switzerland fetters UBS's global dream
By Ariane Luthi and John O'Donnell BERN (Reuters) -Switzerland announced reforms on Friday to make its biggest bank UBS safer and avoid another crisis, hampering the global ambitions of a lender whose financial weight eclipses the country's economy. UBS emerged as Switzerland's sole global bank more than two years ago after the government hastily arranged its rescue of scandal-hit Credit Suisse to prevent a disorderly collapse. The demise of Credit Suisse, one of the world's biggest banks, rattled global markets and blindsided officials and regulators, whose struggle to steer the lender as it lurched from one scandal to the next underscored their weakness. On Friday, speaking from the same podium where she had announced the Credit Suisse rescue in 2023 as finance minister, Switzerland's president Karin Keller-Sutter delivered a firm message. The country would not be wrongfooted again. "I don't believe that the competitiveness will be impaired, but it is true that growth abroad will become more expensive," Keller-Sutter said of UBS. "We've had two crises. 2008 and 2023," she said. "If you see something that is broken, you have to fix it." During the global financial crisis of 2008, UBS was hit by a losses in subprime debt, as a disastrous expansion into riskier investment banking forced it to write down tens of billions of dollars and ultimately turn to the state for help. Memories of that crisis also linger, reinforcing the government's resolve after the collapse of Credit Suisse. For UBS, which has a financial balance sheet of around $1.7 trillion, far bigger than the Swiss economy, the implications of the reforms proposed on Friday are clear. Switzerland no longer wants to back its international growth. "Bottom line: who is carrying the risk for growth abroad?" said Keller-Sutter. "The bank, its owners or the state?" The rules the government proposed demand that UBS in Switzerland holds more capital to cover risks in its foreign operations. That move, one of the most important steps taken by the Swiss in a series of otherwise piecemeal measures, will make UBS's businesses abroad more expensive to run for one of the globe's largest banks for millionaires and billionaires. Following publication of the reform plans, UBS Chairman Colm Kelleher and CEO Sergio Ermotti said in an internal memo that if fully implemented, they would undermine the bank's "global competitive footprint" and hurt the Swiss economy. STRATEGY The reform would require UBS to hold as much as $26 billion in extra capital. Some believe the demands may alter the bank's course. "It could be that UBS has to change its strategy of growth in the United States and Asia," said Andreas Venditti, an analyst at Vontobel. "It's not just growing. It makes the existing business more expensive. It is an incentive to get smaller and this will most likely happen." Credit Suisse's demise exploded the myth of invincibility of one of the wealthiest countries in the world, home to a global reserve currency, and proved as unworkable a central reform of the financial crisis to prevent state bailouts. For many in Switzerland, the government's reforms are long overdue. "The bank is bigger than the entire Swiss economy. It makes sense that it should not grow even bigger," said Andreas Missbach of Alliance Sud, a group that campaigns for transparency. "It is good that the government did not give in to lobbying by UBS. The question is whether it is enough. We have a banking crisis roughly every 12 years. So I'm not really put at ease." UBS CEO Ermotti had lobbied against the reforms, arguing that a heavy capital burden would put the bank on the back foot with rivals. The world's second-largest wealth manager after Morgan Stanley is dwarfed by its U.S. peer. Morgan Stanley shares value the firm at twice its book value, compared with UBS's 20% premium to book. On Friday, the bank reiterated this message, saying that it strongly disagreed with the "extreme" increase in capital. But others are sceptical that the government has done enough. Hans Gersbach, a professor at ETH Zurich, said there was still no proper plan to cope should UBS run into trouble. "The credibility of the too big to fail regime remains in question." (Additional reporting by Dave Graham and Oliver Hirt in Zurich; Writing By John O'Donnell; editing by David Evans) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Times
2 days ago
- Business
- Business Times
UBS faces tough new Swiss banking sector rules
[BERN] The Swiss government on Friday (Jun 6) proposed stricter rules for UBS following its takeover of Credit Suisse, which could make it hold US$26 billion more in core capital, confirming some of the bank's worst fears about incoming new regulations. The key proposal, which the bank would have six to eight years to prepare for after it became law, is that UBS must fully capitalise its foreign units, confirming what many analysts, lawmakers and executives had been expecting. The government said its capital requirement proposal would allow UBS to reduce its holding of Additional Tier 1 (AT1) bonds by US$8 billion. Today, UBS must only 60 per cent capitalise its foreign units and can cover some of the capital with AT1 debt. UBS executives say the additional capital burden will put the Zurich-based bank at a disadvantage to rivals and undermine the competitiveness of Switzerland as a financial centre. Shares in the bank rose after the government unveiled the proposals on Friday afternoon, climbing by more than 6 per cent. Such was the shock in Switzerland over the 2023 collapse of Credit Suisse that top politicians led by Finance Minister Karin Keller-Sutter vowed to introduce more robust rules that would protect taxpayers and prevent another meltdown in future. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Keller-Sutter now holds Switzerland's rotating one-year presidency and Friday's announcement will start a long period of political wrangling over the measures, which the governing federal council called 'targeted and proportionate.' 'They strengthen trust in the financial centre, which, in the view of the federal council, is central to its stability and competitiveness,' the council said in a statement. A parliamentary inquiry last year noted that since UBS bought Credit Suisse for US$3.65 billion in March 2023, it has had a balance sheet bigger than the Swiss economy, and urged the government to take the foreign units into account. The federal council said it would present drafts on the proposals for consultations with stakeholders in the second half of 2025. Finance Ministry officials say laws requiring parliamentary approval will not enter force before 2028. Separate measures known as ordinances that can be issued directly by the government could apply from the start of 2027. A six to eight-year transition period looked appropriate for UBS to meet new rules on capitalising foreign units from when they come into force, the government said. That could give the bank until the mid-2030s to comply. UBS's shares have lagged European peers in anticipation of the tougher rules and sources inside the bank have warned the new regulations could make it an appealing takeover target. Under the Swiss proposals, UBS' Common Equity Tier 1 (CET1) capital ratio could end up somewhat higher than those of global rivals, the government said. UBS's CET1 ratio of 14.3 per cent could rise up to 17 per cent, above rivals like JPMorgan at 15.8 per cent, Morgan Stanley at 15.7 per cent, and 15.3 per cent at Goldman Sachs, it said. Shares in UBS rose more than 60 per cent in the 12 months following its acquisition of Credit Suisse. But the stock has since sharply underperformed; UBS shares have lost about 5 per cent in the past year, while a top European banking index climbed 37 per cent. Analysts say the new regulations could trigger a rejig of UBS's business model, which now focuses on growth in the United States and Asia. To take the edge off the rules, the bank may be tempted to sell some assets, banking experts say. The Swiss government also set out piecemeal reforms to bolster the market regulator FINMA, which was heavily criticised for its response to the Credit Suisse collapse. These include measures aimed at holding bankers to account, giving the regulator the power to impose fines and making it easier to restrain pay and claw back bonuses. Still, the proposals come years after the European Union introduced similar measures in the wake of the 2007-2009 financial crisis. The government also proposed making it easier for banks to access liquidity from the Swiss National Bank. Barriers to transferring collateral to the SNB will also be removed. REUTERS
Kuwait Times
11-05-2025
- Business
- Kuwait Times
US, Swiss agree to speed up tariff talks
GENEVA: Switzerland and the United States agreed Friday to speed up negotiations towards a deal on averting further tariffs planned by Washington, the Swiss president said after talks with top US officials. As part of US President Donald Trump's global tariffs offensive unleashed on April 2, his administration has threatened to impose a 31 percent levy on Swiss exports to the United States. Such a move would be catastrophic for major sectors of Switzerland's economy including manufacturing and watchmaking. For now, Washington is imposing 10 percent tariffs on goods coming from Switzerland and much of the rest of the world. US Treasury Secretary Scott Bessent and China's Vice Premier He Lifeng are meeting in Geneva this weekend in an attempt to cool the trade war between the world's two biggest economies. That gave Swiss officials the opportunity to also hold negotiations on US tariffs. President Karin Keller-Sutter, who is also finance minister, and Economy Minister Guy Parmelin held talks with Bessent and US Trade Representative Jamieson Greer. Greer's office said in a statement: 'Both sides agreed to accelerate negotiations on reciprocal trade. The United States welcomes Switzerland's ambition in these negotiations,' adding that more talks would be held in coming weeks. 'We expect from the US side that we are really treated equally,' Keller-Sutter said after the meeting. 'We can't understand that we have been inflicted 31 percent and the European Union 20 percent,' she told a press conference, when Switzerland 'doesn't charge any industrial tariffs at all, we are at zero'. 'We also would like to accelerate the talks with the US authorities so that we can find a solution very quickly. This is also in the interests of both countries,' she said. The Geneva talks came a day after Britain reached a deal with the United States avoiding the worst of the new levies. Keller-Sutter noted that Switzerland was a key direct investor in the United States, in first place in research and development, and in fourth place in manufacturing. 'The US side was quite clear about the fact that they wanted to accelerate the process with Switzerland,' she said. After the deal with Britain, Washington 'couldn't guarantee that we would come second but that we would really be in a group of countries that are now treated swiftly', she said. She said a proposal for a letter of intent would be submitted aiming for a deal like Britain's. 'The aim of Switzerland is to come back to zero tariffs,' she said. Switzerland exports more to the United States than it imports from it. In 2024, the total value of Switzerland's goods exports to the United States is estimated to reach 52.65 billion Swiss francs ($63.7 billion), according to Switzerland's Federal Office for Customs and Border Security. Pharmaceutical products were the largest export, and the US is Switzerland's second-biggest trading partner after the EU. Imports of goods from the United States were valued at 14.13 billion francs, according to the customs office. There may be only so far that Bern can get Washington to bend. US Commerce Secretary Howard Lutnick said Thursday that Washington was likely to impose tariffs of more than 10 percent on trading partners with which it has a trade deficit. The potential repercussions of the Trump tariffs on Switzerland are still difficult to quantify. In its quarterly sales figures, Swiss food giant Nestle indicated that its Swiss-made Nespresso coffee pods were likely to be affected. Pharmaceuticals were not targeted in the tariffs announced in early April, though the Trump administration has blown hot and cold on such products since then. Faced with the uncertainties, two Swiss pharmaceutical heavyweights took their own initiatives. Novartis has said it will increase its investments in the United States by $23 billion over five years, and Roche plans to invest $50 billion over five years. – AFP
Yahoo
09-05-2025
- Business
- Yahoo
Switzerland and US agree to accelerate trade talks, Swiss president says
By Emma Farge and Ariane Luthi GENEVA (Reuters) -Switzerland and the United States have agreed to accelerate their trade talks and are determined to reach an agreement quickly, Swiss President Karin Keller-Sutter said on Friday, without specifying a time frame. U.S. President Donald Trump has upended global commerce by imposing tariffs aimed at shrinking the U.S. trade deficit in goods. Switzerland is among the countries seeking to strike a quick deal to reduce those tariffs, and Keller-Sutter said it was towards the front of the line after "positive" discussions. "We both actually made a commitment today that the process would be accelerated," Keller-Sutter told reporters in Geneva, saying she was summarising what was agreed in her meeting with U.S. Treasury Secretary Scott Bessent and chief U.S. trade negotiator Jamieson Greer in Geneva. "Both sides are determined to find a solution quickly. That was clearly palpable today and was a clear commitment, including by the American side," she added. Switzerland was hit particularly hard with a 31% tariff rate, compared with 20% on the European Union and 10% on Britain, a decision which stunned Swiss officials, who described it as incomprehensible and counterproductive. The U.S. is Switzerland's single biggest export market. Trump and British Prime Minister Keir Starmer on Thursday announced a limited bilateral trade agreement that leaves Trump's 10% rate there in place, modestly expands agricultural access for both countries and lowers prohibitive U.S. duties on British car exports. "The U.S. side was quite clear about the fact that they wanted to accelerate the process with Switzerland. They couldn't guarantee we would come second (after Britain) but that we would really be in a group of countries that are now treated swiftly," Keller-Sutter said, adding she could not give a time frame.
