Karin Keller-Sutter Repeats Calls For UBS To Hold More In Reserve

Karin Keller-Sutter Repeats Calls For UBS To Hold More In Reserve

Tue, Apr 30th 2024

Federal Councillor Karin Keller-Sutter emphasises the need for banks to boost equity, enhancing stability and reducing taxpayer burdens.

Bundesraetin Karin Keller-Sutter spricht waehrend einer Sondersession des Nationalrats, am Montag, 15. April 2024, im Nationalrat in Bern. (KEYSTONE/Peter Klaunzer)

Federal Councillor Karin Keller-Sutter has repeated her call for banks and their holdings in subsidiaries abroad to have more equity. With more equity capital, a bank can be better wound up in an emergency, according to the Finance Minister.

The aim of the state is to limit the risk. This is also because the balance sheet of the major bank UBS, for example, is twice as large as Switzerland’s gross domestic product, said Keller-Sutter in the “Eco Talk” program on Swiss-German television SRF on Monday evening, parts of which had already been shown in the main edition of “Tagesschau”.

According to estimates, additional equity would cost UBS between CHF 15 and 25 billion, as reported by SRF. Keller-Sutter did not confirm the figure, but described it as plausible.

Keller-Sutter emphasised that if it was assumed that emergency liquidity would be provided in the event of a crisis, with an implicit state guarantee, it would burden the tax payer.

UBS CEO Sergio Ermotti had already rejected the argument that UBS had an implicit state guarantee at the bank’s Annual General Meeting last Wednesday, saying that this was “factually incorrect”. He referred to the loss-absorbing capital of around 200 billion dollars held by UBS.

“UBS’s risks are borne by the shareholders and by the holders of AT1 instruments and loss-absorbing TLAC bonds – not by the taxpayer,” emphasised Ermotti.

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