According to newspaper reports, the UBS boss is warning against a sharp increase in capital requirements

ZURICH (Reuters) – UBS boss Colm Kelleher warned on Sunday that the Swiss government’s plans to increase capital requirements for major banks could harm the country’s position as a financial center.

The government unveiled plans earlier this year for tougher capital requirements for UBS and the three other major Swiss banks in a bid to make the financial sector more resilient after Credit Suisse’s crash last year.

In an article published in the Swiss SonntagsBlick, Kelleher said he agreed with most of the 22 recommendations in the government report, with the exception of the proposal for stricter capital requirements.

“What I really have a big problem with is the increase in capital requirements. “It just doesn’t make sense,” he said of the so-called “too big to fail” report.

Details of the exact capital requirements have yet to be announced, although Finance Minister Karin Keller-Sutter said in April that estimates that UBS would need an additional $15 billion to $25 billion were “plausible.”

In a separate estimate, analysts at Autonomous Research said UBS may have to withhold another $10 billion to $15 billion.

Kelleher declined to comment on the figures but said excessive capital requirements would harm competitiveness and result in less favorable pricing for banking products for customers.

“We should focus on more important issues such as liquidity management and, above all, the full resolvability of a bank,” Kelleher told the newspaper.

According to a 2021 Deloitte study, Swiss banks contribute to their role as the world’s leading financial center with around $2.6 trillion in international assets under management. However, competition is growing from Luxembourg and especially from Singapore, which has grown significantly in recent years.

Experts warn that UBS, whose balance sheet is twice as large as Switzerland’s annual economic output, would pose major risks to the Swiss economy if it collapsed.

Kelleher downplayed the dangers, saying UBS had “significantly more” capital than comparable banks, while the bank’s business model – based on asset management and the Swiss home market – presented little risk.

UBS remained committed to Switzerland even as Bern demanded a large increase in additional capital, said Kelleher, who has been president since 2022.

“Although we are a global bank, at the heart of UBS is our Swissness,” he said, adding there was “no question” the lender would leave its home country.

Nevertheless, he warned that it would be harmful for Switzerland if the bank had to increase its capital.

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“If politics forces us to massively increase our capital, then Switzerland has decided that it no longer wants to be a relevant international financial center,” said Kelleher.

“I think this cannot be in the interest of the country.”

The former Morgan Stanley executive said he was willing to talk to the government about its proposals.

(Reporting by John Revill; Additional reporting by Emma Farge; Editing by Clelia Oziel)