The Zhitong Finance App learned that an influential Swiss committee said it will deal with the UBS Group (UBS.US) capital requirements next month and set the next key date for the country's largest bank. According to a statement issued on Wednesday, the Economic and Tax Committee of the House of Representatives plans to conduct a detailed review of capital support proposals for foreign subsidiaries at the November 23-24 meeting according to the original schedule.
UBS CEO Sergio Ermotti, accompanied by Vice Chairman Markus Ronner, addressed the committee during a closed-door hearing on Monday, showing that the bank continues to work hard to persuade lawmakers to downplay regulatory requirements.
Since Credit Suisse went bankrupt more than three years ago, the Swiss government has sought to make its only remaining global bank crisis-resilient. One of the key pillars of its reform agenda is to raise equity capital requirements to ensure that UBS's overseas operations do not drag down its domestic entities. UBS said the reform would make it uncompetitive.
The commission said in a statement: “There is no doubt that foreign equity support for systemically important banks needs to be strengthened, which requires action.”
Last month, the upper house of parliament (Bundestag) endorsed a plan that is broadly in line with what Finance Minister Karin Keller-Sutter has sought over the past two years: to force the country's largest banks to substantially increase their domestic equity holdings.
If the House of Commons passes the same bill as the House of Lords, the bill will become law. However, if the House of Commons votes for other proposals, the issue will go back and forth between the two houses, further extending the schedule.
UBS said the capital reform would mean an additional $16 billion in core Tier 1 capital (CET1) and make it uncompetitive compared to global peers. The company strongly criticized the House of Lords decision and promised to continue to oppose the proposed measure.
As imminent capital reforms drag down the bank's share price, the question of whether UBS will leave Switzerland has been raised — and some shareholders have urged it — although the move could seriously erode its business model based on Swiss identity.