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UBS is under significant international scrutiny regarding its position on proposed capital regulations, yet its shares are surprisingly resilient, showing an upward trend in the SMI. This situation presents a paradox as the Basel Committee has dismissed the bank's arguments as "misleading," indicating potential volatility ahead.
UBS CEO Sergio Ermotti stated the bank lacks information on potential additional capital requirements amid Swiss government efforts to impose stricter regulations following the Credit Suisse collapse. The Basel Committee supports the government's stance, asserting that UBS's capital standards are not disadvantageous compared to global peers. However, UBS warns that further tightening could harm its competitiveness and the Swiss financial sector, as it already meets some of the world's strictest capital requirements.
Swiss authorities are pushing for stricter capital requirements for UBS, which they argue is necessary to prevent future financial instability. The Basel Committee supports this move, stating that capital standards are similar globally, countering UBS's claims of competitive disadvantage. UBS currently holds 14.82% of its risk-weighted assets as capital, but may need to raise over $20 billion if double counting of foreign subsidiary capital is restricted.
Neil Esho, Secretary General of the Basel Committee, has countered UBS's criticism of stricter Swiss capital regulations, asserting that claims of disadvantage are misleading. He emphasized that Swiss banks have more flexibility in capital recognition compared to other jurisdictions, supporting the Swiss government's requirement for UBS to hold additional capital. Esho noted that the Basel framework aims to ensure sufficient capital across banking groups, highlighting the importance of capital availability in legal entities, particularly for UBS's large US subsidiary.
The head of the Basel Committee defended Switzerland's capital rules, stating they do not unfairly disadvantage local banks like UBS compared to international rivals. UBS has estimated it may need an additional $40 billion in capital due to proposed regulations following the Credit Suisse collapse. Despite concerns about competitiveness, the Basel official emphasized the importance of capital quality over quantity and expressed confidence that major financial centers would eventually adopt Basel III standards.
The head of the Basel Committee on Banking Supervision defended Switzerland's capital rules, stating they do not unfairly disadvantage local banks like UBS compared to international rivals. UBS has estimated it may need an additional $40 billion in capital due to proposed regulatory changes following the Credit Suisse collapse. The Basel Committee emphasizes the quality of capital over quantity, suggesting that Swiss regulations allow for more flexibility in capital composition.
The head of global banking supervision defended Switzerland's capital regulations, stating they do not unfairly disadvantage local banks like UBS compared to international competitors. UBS has expressed concerns over proposed tighter rules, estimating a need for an additional $40 billion in capital, while the Basel Committee emphasizes the importance of capital quality over quantity. Esho highlighted that Swiss regulations allow for more flexibility in capital counting, which could mitigate perceived disadvantages.
UBS may need an additional $40 billion in capital due to new Swiss regulations following the Credit Suisse collapse. Basel Committee's Neil Esho argues that Swiss banks aren't at a disadvantage, emphasizing capital quality over quantity, while UBS warns that stricter local rules could harm its competitiveness.
The head of the Basel Committee has defended Switzerland's capital rules for banks, stating they do not unfairly disadvantage Swiss institutions like UBS compared to foreign competitors. UBS has expressed concerns over needing an additional $40 billion in capital due to proposed regulations, which the committee argues are flexible and allow for double counting of capital. Esho emphasized that the quality of capital is more important than quantity, countering UBS's claims that stricter rules would harm the Swiss financial sector.
UBS CEO Sergio Ermotti warns that stricter capital requirements could harm both the bank and the Swiss economy, leading to higher costs for households and businesses. He advocates for balanced regulation that maintains UBS's international competitiveness while addressing systemic risks. Ermotti emphasizes the importance of a sustainable business model and the need for a fact-based discussion on the costs and benefits of proposed regulations.
Neil Esho
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