UBS Boss Sergio Ermotti Criticizes the Swiss Supervisory Authorities Towards Credit Suisse - Latest Global News

UBS Boss Sergio Ermotti Criticizes the Swiss Supervisory Authorities Towards Credit Suisse

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UBS boss Sergio Ermotti has sharply criticized Swiss authorities for allowing Credit Suisse to collapse, as his bank pushes back against growing calls in the country to increase UBS’s capital requirements.

Ermotti, who was brought back to UBS just days after the state-organized rescue of Credit Suisse last March, criticized the oversight of the failed bank in a speech on Wednesday.

“It is particularly confusing, if not extraordinary, to see that many of those who have been responsible over the years say that they have done everything right in terms of the governance and supervision of Credit Suisse,” he said at the University of Zurich.

“Everyone involved must critically question their role and face their responsibilities. It takes courage to admit shortcomings. But we have to learn from the mistakes of the past.”

His salvo comes a day after the new head of Finma, the Swiss financial regulator with oversight responsibility for the country’s banks, said he supported new rules proposed by the Finance Ministry that could significantly increase UBS’s capital requirements. Analysts have predicted the rule change could result in $15 billion to $25 billion in additional capital for UBS.

“Fourteen months after the rescue of Credit Suisse, we find ourselves in the middle of an intense and often superficial debate about whether UBS is too big for Switzerland,” Ermotti said on Wednesday.

“To be honest, it is quite surprising how quickly UBS went from being seen as a savior to becoming a potential future problem for the country.”

Much of the growing hostility stems from a report the Treasury Department released last month that included a proposal to force banks with international operations to hold higher amounts of capital.

Ermotti told analysts when releasing first-quarter results last week that UBS had not been consulted on the proposals, even though it would be hit hardest as the country’s most global lender.

While the report did not provide details about what the requirements might look like – and they are not due to be presented to the Swiss Parliament until next year – Finance Minister Karin Keller-Sutter indicated that analysts were estimating between $15 billion and $25 billion in additional capital is “plausible”.

On Tuesday, Stefan Walter, the new boss of Finma, said at a banking conference in Switzerland that he supported UBS in increasing the capital of foreign subsidiaries.

“The more difficult it is to resolve a bank, the higher the precautionary capital buffers have to be,” he said. “We will keep a very close eye on this.”

IMF Managing Director Kristalina Georgieva also weighed in on the capital rules this week, telling Swiss media outlet SFR that the agency had already had concerns about oversight of the Swiss financial industry in 2019.

She added that she expected other countries to follow Switzerland’s lead and propose increasing capital requirements for their banks in response to the collapse of Credit Suisse and several U.S. lenders last year.

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