UBS CEO Sergio Ermotti warns against strict capital rules

UBS CEO Sergio Ermotti has issued a strong warning against proposed strict capital requirements for the bank ahead of a decisive vote in the Swiss upper house. The regulations, stemming from the 2023 collapse of Credit Suisse, aim to bolster financial stability but face intense opposition from UBS leadership.

Ermotti criticized the Swiss Federal Council's proposal, which would require UBS to back its foreign subsidiaries with 100 percent Common Equity Tier 1 (CET1) capital. He argued that such high requirements would act “like a tariff,” harming the bank's competitiveness and impacting customers, employees, and the Swiss economy. UBS is advocating for a compromise proposed by a parliamentary committee, which would allow a 50/50 split between CET1 capital and Additional Tier 1 (AT1) bonds.

In a sharp critique of Swiss authorities, Ermotti also held the Swiss National Bank (SNB) and the financial regulator FINMA responsible for the Credit Suisse crisis, alleging they ignored warning signs and provided excessive concessions. He noted that while a compromise involving roughly $13 billion in additional AT1 capital would be “painful but doable,” the government's current demands could lead to unsustainable costs for the institution.