UBS could be seen as too big for Switzerland following its takeover of Credit Suisse, former Swiss Finance Minister Ueli Maurer said on Saturday, and steps should be taken to reduce the risks of the enlarged bank .
“If you look at the numbers and compare UBS to the Swiss economy, it is too big,” Maurer told the Tages-Anzeiger newspaper. “This is why the risk must be reduced.
At around $1.7 trillion, UBS’s balance sheet represents twice Switzerland’s annual economic output, giving the bank exceptional weight for a large economy.
If the bank fails, there are no local rivals left to absorb it, while the cost of nationalization could seriously damage public finances, experts have warned.
According to Maurer, risk reduction is primarily the responsibility of shareholders, who choose board members.
“It is they who must take responsibility, not the taxpayers at the end of the day,” said Mr Maurer, who left office a few months before Credit Suisse’s final collapse in March 2023.
“Legislative measures also need to be examined,” said Maurer, who also defended himself after a recent parliamentary report raised questions about his actions as the Credit Suisse crisis deepened at the end of the year 2022.
Last year, the Swiss government outlined plans to tighten capital requirements for UBS and Switzerland’s three other big banks, aiming to make the financial sector more robust following the collapse of Credit Suisse.
Details of the exact capital requirements have not yet been revealed, but the possibility that UBS would be required to hold between $15 billion and $25 billion in additional capital has been met with some resistance from the bank.
Mr Maurer said if capital requirements were too high, Swiss banks would no longer be competitive and might look to expand elsewhere.
“For the Swiss economy, which has many multinationals, a large bank is a geographical advantage,” he said. “But the risks must be minimized.
UBS has been contacted for comment.
