This is how Finance Minister Keller-Sutter wants to regulate the banking center
Published: Wednesday, Apr 10th 2024, 15:50
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For Finance Minister Karin Keller-Sutter, one thing is clear: "There are gaps in the 'too big to fail' regulations." The risks posed by systemically important banks must be minimized. Keller-Sutter said this on Wednesday in response to various questions:
WHAT ARE THE GOALS OF STRICTER REGULATION?
"Should UBS one day get into difficulties comparable to those experienced by CS a year ago, a forced takeover would no longer be possible. We must therefore prevent a bank from maneuvering itself into such a hopeless situation. The primary goal is to protect taxpayers and the economy. The CS case must not be repeated. The restructuring and liquidation of a systemically important bank must be feasible, practicable and credible."
WHAT ARE THE PILLARS OF THE NEW RULES?
"It's about prevention, crisis management and resolvability. We need higher capital and liquidity requirements as well as measures against management failure and bonus excesses."
WHAT SHOULD BE NEWLY REGULATED WITH REGARD TO OWN FUNDS?
"The Federal Council is proposing stricter capital requirements than before. We should better regulate how much equity a bank must hold in which companies. It is not possible to give a figure, it depends on the size and risk profile of the bank."
WHAT SHOULD BE NEWLY REGULATED WITH REGARD TO LIQUIDITY?
"More liquidity is needed at the banks themselves, more options for the Swiss National Bank (SNB) in the event of a crisis and, in the worst case, a state liquidity guarantee."
WHAT IS PLANNED FOR VARIABLE REMUNERATION?
"It must also be possible to cancel bonuses retroactively. It's not about punishment, but about prevention. It must no longer be worthwhile for managers to take irresponsible risks in future."
HOW DO YOU REACT TO THE CONTINUING HIGH UBS BONUSES?
"UBS is a private company. The shareholders are responsible. However, the high bonuses - also at other companies - do concern me. I can't understand certain salaries. I would have to stay in office for over thirty years to reach this amount [UBS CEO Sergio Ermotti's bonus]. It's about remuneration that goes beyond the imagination of any normal citizen. I don't think this development is good. In a country where the people set the framework conditions for the economy, this is not clever."
IS A SECOND CASE OF CS NOW RULED OUT?
"There is no sensible regulation that can eliminate every risk. But we must minimize the risk to the best of our knowledge and belief. The report points the way to a significant improvement. However, decency cannot be regulated. There are always rule violations, but it must be possible to take action against them."
HOW DOES THE BANKING CENTER REACT TO THE PROPOSALS?
"I assume that the industry doesn't agree with everything. Ultimately, it's a question of arguments and weighing up interests. The debate is right."
WERE THERE ALTERNATIVES TO THE CS TAKEOVER?
"I am of the opinion that there was no alternative to the forced takeover due to the circumstances. If CS had been wound up, it could have triggered an international financial crisis and caused major economic damage. The international opinion is that the option chosen was the best one. The Credit Suisse brand had been damaged to such an extent that a restructuring would have meant a major risk for taxpayers."
WOULDN'T NATIONALIZATION HAVE BEEN BETTER?
"No, nationalization would be a total capitulation. Then everyone could take big risks - in the hope that the state would come and take over everything in the event of a crisis. Nationalization is not a 'too big to fail' scenario. We must prevent crises from leading to the state ultimately bearing the risk."
©Keystone/SDA
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