While he wants Switzerland to avoid hampering banks with rules that make them uncompetitive, the CEO also said the country's regulatory backdrop can be a useful differentiator.

The chief executive of UBS says the bank opposes the Swiss government’s proposals to make the Zurich-listed lender hold substantially more capital, arguing that the design of new rules will hurt competitiveness, Bloomberg has reported.

The requirement to maintain 100 per cent backing of its foreign units would be “an extreme overreaction that will not really help foster Switzerland as a leading financial centre,” Sergio Ermotti (pictured) was quoted telling the news service in an interview at the World Economic Forum in Davos yesterday. 

UBS is scheduled to issue fourth-quarter and full-year 2024 financial results on 4 February.

“We are trying to present the case for why it’s totally unnecessary and incredibly penalising to say that a foreign participation is worth nothing on your balance sheet,” Ermotti said. He added that UBS welcomes most of the government’s other proposals, which include strengthening the national regulator, FINMA.

Switzerland is trying to reform its financial regulation and plans are expected to be completed in the coming months, the report noted. As reported in April last year, the Federal Council wants systemically important Swiss banks – such as UBS – to hold significantly more capital against their foreign units. UBS, Raiffeisen Group, ZĂĽrcher Kantonalbank and PostFinance are deemed systemically important lenders.

The “shotgun wedding” in March 2023 of UBS and Credit Suisse, undertaken at the behest of Swiss authorities because of a dramatic slide in Credit Suisse’s fortunes amid a number of scandals and missteps, means that UBS is now the country’s only universal bank. Ironically, during the 2008 financial crisis, it was UBS that had to be bailed out. At the time, there was much commentary about avoiding creating banks that were so large that they would be deemed “too big to fail.”

Ermotti said that the Swiss regulatory backdrop does help UBS to stand apart from its competitors. He said that talk in the Swiss media of moving the bank elsewhere, such as the US, was “not a topic” for him at this time.