ZURICH - Finance Minister Karin Keller-Sutter and UBS chief executive Sergio Ermotti used a Zurich audience on Tuesday for a last public argument before the Council of States votes on bank capital. She defended a hard equity rule. He said both versions now in play would damage the bank.
Keller-Sutter, who oversaw the 2023 takeover of Credit Suisse, said backing foreign units with 100 percent Common Equity Tier 1 capital is the best way to protect taxpayers. The Swiss National Bank supports that proposal. Losses, she said, should fall on shareholders rather than on the public.
Three UBS capital options on the table
Three numbers are in front of the upper house. The government wants 100 percent CET1 backing for foreign subsidiaries. A group of senators wants 90 percent CET1. The economic affairs committee of the Council of States agreed in late August on a 50-50 split between CET1 and Additional Tier 1 bonds, which are cheaper for a bank to hold.
Keller-Sutter described the 90 percent option as close to the government's submission. Ermotti rejected both the 90 percent line and the 100 percent line. He said the debate should also record that UBS is a benefit to the Swiss economy, not only a risk.
We are very concerned that this would make us uncompetitive and ultimately call into question the sustainability of the business model.
Ermotti told the same Zurich audience that the next weeks and months will shape the Swiss financial centre for 10 to 20 years. In Monday's NZZ he said excessive capital requirements would be carried not only by shareholders but also by customers and employees.
Why Zurich is listening
UBS is the last global bank still headquartered in Switzerland. The Credit Suisse rescue removed a rival and left one balance sheet larger than the national economy. That is why a technical ratio has become a political argument in Zurich as well as in Bern.
The upper house postponed the ballot on 17 September after the debate overran. Wednesday is the new date. Whatever the Senate decides will still have to clear the National Council, with a finished law more likely in 2027 than this year. The earlier fight over the committee text is in our 1 September report.