Rethinking Banking Regulations: The SBA Takes a Stand
Amid the fallout from the Credit Suisse crisis, the Swiss Bankers Association (SBA) has raised its voice against the Federal Council’s aggressive plans to overhaul capital requirements for foreign subsidiaries. The SBA argues that the issues at play were not the low capital requirements themselves, but rather the extensive exemptions granted by the financial regulator Finma to various institutions.
“The lesson is clear: we must eliminate these exemptions moving forward,” the SBA stated in a recent announcement. “Yet the Federal Council intends to substantially increase capital requirements for foreign subsidiaries—a move that lacks international precedent and is divergent from practices in other financial hubs like the U.S. and Europe.”
New Rules, New Risks: Impact on Competitiveness
The SBA warns that the Federal Council’s proposed changes could diminish the attractiveness of conducting international business from Switzerland—a significant concern given that approximately half of the 9.3 trillion francs in assets managed in the country originates from foreign clients. The association contends that it is naive to think the burden of increased costs can simply be offloaded onto international clients. Ultimately, it would be the entrepreneurs, customers, and local clients who pay the price through more expensive loans and diminished services, triggering a decline in Swiss competitiveness.
Calls for Deliberation: Assessing Economic Impact
In light of these proposals, the SBA is advocating for a balanced, internationally coordinated approach to regulatory changes. They insist that a thorough economic impact assessment is crucial before implementing any drastic measures. The association noted that while the Federal Council recognizes regulatory relief as a critical economic objective, this vision must also extend to banking regulations. The message is clear: finance and industry are intertwined, and the SBA pledges its commitment to contribute constructively to this ongoing discussion.
UBS Takes a Stand: Concerns Over Proposed Capital Increases
UBS has weighed in on the matter, expressing that while they are reviewing the government’s latest documents, they generally support most of the proposals put forth by the Federal Council on June 6, 2025, provided these changes are implemented in a “targeted, proportionate, and internationally aligned” manner.
However, UBS draws the line at the proposed hikes in capital requirements, labeling them “extreme” and misaligned with global standards. The bank argues that the lessons from Credit Suisse’s collapse have not been adequately prioritized. UBS elaborated that compliance with the new requirements would mean adding an additional USD 24 billion in CET1 capital to the already mandated USD 18 billion, resulting in a total of USD 42 billion. This scenario would push UBS’s CET1 ratio to around 19 percent, soaring above the average required for globally systemic banks—by at least 50 percent.
Questions & Answers
What are the main concerns of the Swiss Bankers Association regarding the Federal Council’s proposals?
The SBA is particularly concerned that the increased capital requirements for foreign subsidiaries will make international business less appealing, which could ultimately lead to higher costs for entrepreneurs and clients in Switzerland.
How does UBS view the proposed capital increases following the Credit Suisse crisis?
UBS firmly rejects the proposed hikes, calling them extreme and not aligned with international standards. They argue that they would force UBS to hold an unsustainable amount of capital, significantly above the average for global banks.
What does the SBA suggest for future regulatory changes?
The SBA calls for a comprehensive economic impact assessment before implementing drastic policy shifts and stresses the need for international coordination to ensure that regulatory relief is genuinely achieved in banking.
