Concerns for Switzerland’s Financial Hub Status

Colm Kelleher, chair of UBS, has raised significant concerns about the Swiss government’s proposed capital increases for major banks, warning they could jeopardize Switzerland’s status as a global financial hub.

In a recent SonntagsBlick interview, Kelleher expressed support for many recommendations from a government report aimed at strengthening the financial sector post-Credit Suisse crisis, but he criticized the push for stricter capital requirements, stating, “It just doesn’t make sense.”

While details are still vague, UBS may need to secure an additional $15 billion to $25 billion under the new requirements. Kelleher warned that excessive capital demands could reduce the bank’s competitiveness and raise costs for consumers.

He urged the government to focus on liquidity management and crisis resolution instead of imposing heavier capital burdens, emphasizing that Swiss banks manage around $2.6 trillion in international assets, underscoring their global significance.

With rising competition from financial centers like Luxembourg and Singapore, Kelleher cautioned that increased capital requirements could force UBS to reevaluate its operations in Switzerland. He reiterated the bank’s commitment to its home country but highlighted the potential downsides of strict regulations.

Experts note that UBS’s vast balance sheet poses risks if it were to fail, but Kelleher downplayed these concerns, citing the bank’s strong capital reserves and focus on wealth management as indicators of stability.

He warned that significant capital increases could signal Switzerland’s retreat from being a competitive international financial center: “If politics forces us to massively increase our capital, then Switzerland has decided it no longer wants to be relevant.”

Ultimately, Kelleher advocates for prioritizing Switzerland’s financial reputation, highlighting the need to balance regulatory measures with maintaining competitiveness in a dynamic global landscape.