UBS executives on Wednesday (Apr 24) told shareholders that the bank has major concerns about the Swiss government’s recently announced plan to hit the country’s largest lender with tougher capital requirements.
“We are seriously concerned about some of the discussions related to additional capital requirements,” UBS chairman Colm Kelleher said at the bank’s annual general meeting in Basel.
“Additional capital is the wrong remedy.”
UBS might need to find US$15 billion to US$25 billion in additional capital after Switzerland’s government laid out plans for how to police banks deemed “too big to fail” to shield the country from a repeat of the collapse of Credit Suisse.
The Zurich-based UBS acquired its long-term rival last year following Credit Suisse’s meltdown that roiled global financial markets and stirred fears that the enlarged bank could upend the Swiss economy if it ran into trouble.
UBS CEO Sergio Ermotti said the merger of the Swiss entities of the two banks should occur before the end of the third quarter, and that difficult decisions still lay ahead during the restructuring of Credit Suisse.
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“Despite our efforts to lessen the impact, in the short to medium term we will need to part ways with some colleagues,” Ermotti said after a weekend media report said the bank was planning five rounds of lay-offs in the coming months.
The merger prompted the government to draft plans to prevent a possible UBS collapse, although the timeline for changes remains unclear with a long legislative process still ahead.
Despite this prospect of tougher capital rules, Kelleher said UBS remained committed to distributing excess capital to shareholders via dividends and share repurchases.
“UBS is not too big to fail,” he said, noting that it was one of the best-capitalised banks in Europe. REUTERS
